Not all clients are created equal. So it’s important to understand the differences and needs of different generations. Craig White and Grant White contributors with Advisor.ca outlines more about working with Nex Gen clients in the following article.
Statistics show the majority of our clients are at, or near retirement. And while this age group may be most in need of our services, we shouldn’t ignore the younger generation. These clients will eventually possess the same level of wealth as their parents, either through accumulation or inheritance, so it’s critical to our success.
Since we’re younger advisors, we’re often part of the same social or business circles as them so it’s easier for us to prospect.
But the best way to get these clients is to approach children of your existing book. So how can you continue relationships when your current clients pass on wealth? The key is to start early and establish relationships before the next generation has a real need for our services.
We focus on the importance of wealth management planning as a process that transcends multiple generations. For instance, when discussing estate planning or a business transition where money or assets are being passed on, it’s critical to involve the children.
We had a retiree client who was concerned about what would happen to her estate after she passed. She had three children, all of whom lived in Canada, though not in the same city. We met with our client and an estate planning specialist to decide what she wanted to do. We formulated a plan to structure the will, and invited the children to participate in this process via conference call. The end result was a satisfied client, and children who better understood their mom’s estate plan. This will lead to less chance of conflict when our client passes away.
As a result of that meeting, we were able to talk to each of the children individually about their own wealth management needs. And since they live in provinces we are already licensed in, we were able to advise them. None of them had current advisors, though some had RRSPs or TFSAs through their retail bank branches. After seeing the level of service we provide, they all opened accounts with us. We suggested they start contributing to various balanced mutual funds, which are the best option when a client is just getting started since it’ll simplify and diversify their portfolios.
While taking on younger clients is necessary for business longevity, you need to be mindful of taking on too many that don’t have assets to invest. If you take on a Gen Y who hovers near your asset minimum, here are some tips to boost profitability.
- Simplify their portfolios to ensure they require little maintenance. Again, we normally use balanced mutual funds, since the funds will automatically rebalance themselves.
- Explore other areas of revenue generation, such as insurance or banking. While many younger clients don’t have significant assets to invest yet, they often have insurance requirements.
- Establish regular contributions, like to a TFSA, to ensure their portfolios are always growing. This is a prudent planning step for their wealth accumulation, and ensures clients are growing their accounts with you.