Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Dan's new book for millennials, Wealthier: A Field Guide to Financial Freedom, will be published in April 2024 and available on Amazon.
My company has designed many websites for advisors that target various niches. To date, not a single firm has expressed an interest in the one demographic that is the future of investment advice: younger investors (born between 1981 and 2012).
Your choice is stark: Adapt to engage this emerging demographic or risk obsolescence.
Millennial market potential
Between now and 2045, millennials, alongside their successors, Gen Z, are estimated to inherit a staggering $84 trillion. This transfer of wealth, the largest in history, presents an unparalleled opportunity for you.
The wealth surge among millennials
By the close of 2021, millennial wealth had ballooned to an impressive $9 trillion. Despite this burgeoning affluence, millennials account for a mere 14% of advisory clients, exposing a significant gap – and a golden opportunity – for firms willing to bridge it.
The Fidelity study
A study from Fidelity found that advisory firms that have successfully integrated a younger clientele are growing nearly 10 times faster than their counterparts, based on an analysis of 1,501 on-platform custody firms.
Wealthier:
A Field Guide to Financial Freedom
Why have so many financial advisors agreed to review an advance copy of Wealthier: A Field Guide to Financial Freedom? It empowers millennials to be responsible DIY investors and financial planners. You can see some of their reviews here.
Wealthier will be published in April 2024.
Here’s what one advisor said: "Saplings grow into trees. We need to help the next generation of investors get to where they need our services."
For more information, visit the website for Wealthier:
To review Wealthier send an e-mail to: [email protected]
Nearly half (45%) of all new Fidelity retail accounts in the third quarter of 2022 were opened by investors between 18 and 35.
Fidelity found that younger investors have a keen interest in their finances, and 85% of them would like some form of behavioral coaching from advisors to keep them from making mistakes, yet “advisors have reached out to only 13% of clients’ children, and only one in five advisors have an asset-weighted client age under 60 years old.”
The inheritance factor
More than half of your affluent clients believe their children will inherit $1 million. According to Matt Oechsli, the author of Building a Successful 21st Century Financial Practice, “...51 percent of these millennial offspring will most likely be in need of a financial advisor.”
The future of your firm
How important is it for you to target younger investors?
Here’s the view of Anand Sekhar, vice president of practice management and consulting at Fidelity International: “Advisors who don’t adapt to this shift also risk the overall longevity and valuation of their firm.”
A shift in focus
The average age of your clients is approximately 64 years old.
The problem is that younger clients are less profitable than your older client base, so you are ignoring them.
Start by making it a goal to attract younger clients and track your progress.
Initially, prepare a database of younger relatives of your existing clients. Then, offer to meet with them without charge. You could even sweeten the offer by agreeing to provide basic counseling at no fee or a reduced one.
Here are additional strategies for attracting younger investors.
Develop a strong online presence
Younger investors are accustomed to researching and making decisions online. Your website should be user-friendly, informative, and mobile-responsive. It should include educational content, investment calculators, and easy-to-navigate tools. Be sure your website is optimized for SEO.
If you have the budget and patience to wait for results, consider investing in an SEO campaign for this demographic.
Offer robust mobile apps
Invest in user-friendly mobile apps to cater to the on-the-go nature of younger investors. These apps should provide easy access to account information, trading capabilities, and educational content. Interactive features, like goal-setting tools and investment simulators, can enhance the user experience.
Embrace fintech solutions
Incorporate fintech tools like automated investing and AI-driven portfolio management. These technologies can streamline processes and reduce costs, which can be passed on through lower fees.
Offer socially responsible investment (SRI) options
To align with the values of younger investors, offer a range of SRI options. ESG investing has gained popularity among millennials and Gen Z. Collaborate with fund managers specializing in ESG or impact investing to diversify your product offerings. Educate your clients about the positive impact of their investments on society and the environment.
Fee transparency
Younger investors are skeptical of hidden fees. Make your fee structure transparent and easy to understand. Provide cost-effective options that fit the needs of this demographic. Use precise language and visual aids to explain your fees.
Focus on education
Create a library of educational resources covering various investment topics, including articles, videos, webinars, and podcasts. Hosting live webinars or workshops can engage younger investors and answer their questions in real time.
Personalize communication
Younger investors value personalized communication. Use data analytics to segment your client base and send targeted relevant messages. Tailor your communication to their preferences, whether it's through email, SMS, or social media. Offer one-on-one consultations or virtual meetings to address specific concerns and goals.
Emphasize long-term benefits
Highlight the long-term benefits of investing to appeal to younger investors. Show them how starting early can significantly impact their financial future. Illustrate potential scenarios and the advantages of a disciplined, long-term investment strategy.
Engage on social issues
Show your commitment to social and environmental issues by participating in charitable activities or supporting causes that resonate with younger investors. Share your involvement on social media and your website.
Final thoughts
You counsel your clients to “play the long game.”
Follow your advice. The “long game” for advisory firms depends on your ability to attract younger investors. Make that a short-term goal and start implementing it now.
Dan coaches evidence-based financial advisors on how to convert more prospects into clients. His digital marketing firm is a leading provider of SEO, website design, branding, content marketing, and video production services to financial advisors worldwide.
Dan’s new book, Wealthier: The Investing Field Guide for Millennials, will be published in April 2024.
A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out our podcasts.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Here’s what one advisor said: "Saplings grow into trees. We need to help the next generation of investors get to where they need our services."