Today’s Opportunities, Tomorrow’s Investors

Shelley Yates, Communications Senior Advisor
January 3, 2018

The best time to plan for tomorrow is today. Over the next 30 years, it’s estimated that $30 trillion will be passed down from baby boomers to Generation X and Millennials.1

Furthermore, the total amount of wealth in the U.S. is expected to increase from $72 trillion to $120 trillion by 2030.2 This great transfer and expansion of wealth creates significant future potential, but is the long-time financial advisor prepared to capitalize on the opportunity?


Who are the Next Generations of Investors?

As Generation Xers and Millennials become the high-net-worth investors of the future, advisors must adapt if they want to remain successful. Though these clients may go through the same life stages their parents did (marriage, death of a parent, birth of a child, etc.), what worked in the past on providing guidance through these life stages is not likely to work in the future. Here’s why.

Generation X, born between approximately 1965 and 1980, has lived through several cycles of economic recession, which may make them hesitant to trust. They are also the first generation to grow up alongside technologies like personal computers, cell phones and the internet. Their potential reluctance to trust and their familiarity with learning new technologies distinguish them as perhaps more self-reliant and entrepreneurial in spirit than other generations. Because of this, proving your value is critical to your success in working with this demographic; positioning yourself as a thought leader and offering a top-notch service model are of utmost importance.

On the other hand, Millennials, born between approximately 1980 and 2000, are perhaps most notable for how judicious they are with their time. They have grown up with all of the world’s information at their fingertips and with multiple technologies competing for their attention. This often means that they do much of the research before meeting with an advisor to maximize the value of the discussion. To appeal to these individuals, financial advisors must be prepared to move quickly and be open to planning for smaller blocks of time (3-5 year increments), rather than what Millennials may see as vague, intangible goals, like retirement.

How Can You Prepare Your Firm for the Future?

Technologies like social media are now over a decade old and heavily utilized by both generations, which means that advisors must learn to use social media effectively to appeal to clients who are making near-constant use of them. Don’t forget: social media isn’t just about self-promotion. Social media can help advisors spot important life events in their clients’ lives (marriages, births, death of parents, new business, etc.), as well as notice trends among their entire client base (such as fear of economic recession).

Authenticity is essential to working with both generations, so be thoughtful in your approach and be accepting of non-traditional approaches (e.g., financially, lifestyle, communication style, etc.). Respondents to an InvestmentNews survey noted the tendency of Baby Boomer advisors, in particular, to unintentionally appear condescending in initial one-on-one meetings.2 Keep in mind that Generation X and Millennials are also more interested in thematic investing than previous generations. Compared to 31 percent of the general population, 83 percent of Millennials and 61 percent of Generation X are interested in thematic investing that may align with long-term demographic trends, personal values, and/or disruptive technologies.3

Don’t let what is being dubbed the “Great Wealth Transfer” cost you client assets; instead, let it be an opportunity to grow and diversify your client base. Here’s how:

  • Do bring up wealth transfer and estate planning with your Baby Boomer clients; showing them you care about their children’s success in addition to their own can deepen your existing relationship and serve as an introduction to their children, who may already have assets of their own to invest.
  • Don’t forget that, even within the same family, different generations have different needs, communication styles, and more. It has never been more important to tailor your approach to your audience.
  • Do embrace social media. It is a technology that is here to stay, that can position you as a thought leader to your clients, and that can be mined for information about important life milestones that your clients have reached.
  • Don’t interpret Generation X’s and Millennials’ embracement of technology as devaluation of human advice. When surveyed, over 64 percent of millennials and 48 percent of Generation X indicated that they planned to increase the percentage of their investable assets managed by a financial advisor or broker within the next ten years.3
  • Do be authentic and accepting, especially of yourself. Generation X and Millennials want an advisor who is as true to himself or herself as they believe they are.

1 “The great wealth transfer is coming, putting advisers at risk.” InvestmentNews.
2 “GEN WHY? How to Succeed With Younger, HNW Clients Who Question Everything.” Pershing.
3 “Beyond Baby Boomers – The Investable Assets of Tomorrow.” GlobalX.

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