The next generation of clients is your biggest business opportunity right now.
According to a report by Cerulli Associates, Baby Boomers in the United States alone are expected to transfer $68 trillion in assets to their heirs over the next 25 years. This shift presents both a challenge and an opportunity for financial advisors.
Catering to the next generation – millennials and Gen Z – isn't just a choice; it's a strategic imperative for long-term sustained growth. Adapting to the needs of these younger prospects is no longer optional. You need to make them clients now, instead of delaying.
The wealth transfer is happening now
The reality is the generational wealth transfer has already begun. You cannot wait for another year or decade to make your client’s children your new clients. Bringing them into family meetings isn’t good enough either. And trying to make them a client after their parent’s funeral is just too late.
You have to create your plan for how you’re going to make them clients, now. Once the plan is created you then need to activate it – for some firms that means bringing in younger advisors who can connect with the next generation. For others it means upgrading their technology and planning approaches to offer modern options for next-gen clients who demand a seamless technology experience along with guidance from an advisor.
At AdvisorEngine®, we studied the challenge. There's a distinct opportunity to grow, but only if your firm focuses on taking critical steps to secure the next generation of clients.
Historically, advisor practices have grown through referrals. To tackle the next gen challenge, utilize the opportunity you already have - make a point of getting referrals from your client base that already trusts your advice. You already have a foot in the door. You’re already trusted by their parents; leverage that familial bond to ask for the referral to their children.
Visualize, for a moment, an advisory firm today with $600 million in assets between 300 client relationships.
If the firm remains status quo and does not make a fulsome effort toward securing the next generation of clients, we estimate they will experience a 56% reduction in client assets due to client attrition. Now, if the same firm were to convert that current client base into a referral machine for winning next-generation clients, the future situation would change radically.
Despite this major opportunity, many advisors hesitate to adapt their approaches.
Traditional client engagement and wealth management methods have served advisors well, fostering stable and prosperous client relationships. The hardest time to change, though, is when things are going well.
A scalable, connected solution
I believe one of the main reasons why there is a reluctance among advisors to change is fear. Advisory firms take immense pride in the service they offer their clients and they are concerned about not being able to deliver the same level of service to smaller relationships.
Firms have historically found it hard to scale and deliver their level of service with smaller relationships – particularly younger clients – because it is a lot of work to onboard a client, manage and maintain the client’s accounts, create reports, etcetera ....
Candidly, the industry up until recently hasn’t provided a scalable, connected solution for serving the mass affluent or younger clients. The good news for firms is there are scalable platform options now.
For RIAs oriented toward offering goals-based planning, AdvisorEngine’s wealth management platform provides tools embedded into workflows that can help them serve smaller accounts much more easily.
Underneath our goals-based planning tool is a lot of science, but the actual engagement to start that process of an advisor and client working together on a plan is now simple and scalable, allowing them to streamline and connect the whole process to deliver consistent levels of service and advice to accounts of all sizes.
We’ve eliminated all the friction of why an advisor may not engage with some or all of their clients. There is no double-data entry, for instance. Data from a client’s plan is automatically incorporated into the advisor implementation process in the AdvisorEngine platform.
Each firm of course has their own approach to serving clients. But we understand the advisor that wants to focus on goals-based planning is trying to learn about a client’s needs to really connect with that client.
You're unpacking what’s important to that client. What's the lifestyle they want to have when they retire? What will be their core future spending needs? It could be for their children’s education. It could be around philanthropy and a cause that’s very important to them. It could be buying that second home, or having a special vacation that they want to plan for.
Think about the data you need to uncover about the participants, then, who are typically the two spouses. You have to uncover their income, when do they want to retire, what are their thoughts on expenses pre- and post-retirement, discover and then prioritize their goals. Additionally, you’re maintaining an ongoing discussion with your clients to make sure you’re correctly updating that information.
So we’ve removed the heavy lifting from the advisor who’s had to input the client’s information to build a plan. Our highly intuitive workflows make it simple for an advisor’s prospect or client to do it; they know how old they are, they know their date of birth, they know their income, they know their goals. This allows advisors and clients not to focus on data entry together but instead to focus on what's important – their goals and their life journey.
