How RIAs Can Better Serve Millennial Clients

Apr 14, 2023 | Guides

From the perspective of financial advisors, millennials represent a valuable client base. 

For one, as investors, many have great attitudes. Having navigated the 2008 Recession during their early adulthood years, millennials have adopted a generally positive and optimistic attitude about their finances. According to research from Ameriprise Financial, 61% of millennials say that they feel good about their finances. Meanwhile, 58% think that they are faring well relative to their age cohort.

The study elaborates that millennials receive value when working with financial advisors. About three-quarters (76%) of millennials who work with a financial advisor feel good about where they stand financially. According to research from RBC Wealth Management, millennial wealth jumped from $4 trillion in 2019 to $9 trillion at the end of 2021.

Here’s how to better serve your millennial client base.

Empathize with millennials’ concerns

Advisors under the age of 40 account for only 11% of the financial advisor population, according to the J.D. Power 2019 U.S. Financial Advisor Satisfaction Study. It’s understandably challenging, as a result, for RIAs to understand millennials’ communication styles, decision-making processes, and concerns.

If you’re not a millennial cohort, you might find it difficult to understand their preferences, communication styles, and decision-making processes. The best way to adapt to the advisory needs of millennials is to empathize what makes them unique. It’s important to recognize that in the United States especially, different generations are facing different challenges and constraints in life. Here are some examples, according to Ameriprise:

  • “Over half of millennials said one of their top three money goals is ‘increasing my income’ (54%) followed by ‘paying down debt’ (42%). In comparison, 66% of Gen Xers surveyed said ‘saving for retirement’ was their top goal, and boomers reported that “protecting accumulated wealth” (55%) is their No. 1 priority.”
  • “Seventy-eight percent of millennials reported receiving money – including inheritances, college funds, and down payments on a car or home – from family members. And surprisingly, 41% of millennials expect to receive financial help in the future. Comparatively, 24% of Gen Xers and 5% of boomers expect family members to contribute to their financial well-being down the road.”

A powerful step for RIAs is to step beyond their own biases and recognize that millennials are navigating a very different economy than what previous generations inherited. For many millennials, receiving help from parents is the only option for stability.

  • “An overwhelming majority (90%) say they are very or somewhat concerned about high inflation, tax increases (84%), a recession (83%), and high interest rates (80%). These macroeconomic issues may be undercutting their outlook on their personal finances.”
  • “As they take on more life responsibilities, millennials are feeling the strain of debt. The study found eight in ten (81%) millennial investors have debt and more than half of them (57%) report it is impacting their ability to achieve other goals. Among millennials with some form of debt, 62% have credit card debt and 32% have student loans. Additionally, nearly one in five (18%) have some form of medical debt.”

Despite these macroeconomic stressors, millennials are seeking constructive solutions for themselves to ensure a strong personal foundation. As an advisor, you’re in a powerful position to lend assistance and support.

Adapt to millennials’ busy lives 

Recently, millennials have been labeled as the “burnout generation” due to the economic stressors of everyday life.

The Ameriprise study confirms that millennials are in a “busy season of life, often juggling careers, families, and other responsibilities.”

“More than half of millennials (56%) report feeling the pressure of balancing multiple financial priorities, which is markedly higher than older generations. Only 38% of Gen Xers and 23% of boomers said managing competing priorities is difficult.”

“Adulting,” as millennials would say, has not been easy.

“Many high-earning millennials find their time consumed by juggling important responsibilities for the first time—such as buying a home, starting a family, caring for aging parents, saving for their children’s education, starting a company, or building a career—as well as preparing for other milestones still to come,” explains JD Power. “And as their lives grow in complexity, so too do millennials’ financial questions.”

Technology can help provide a level of support to millennials who are overwhelmed by the demands of life.

“The 9-to-5, office-based culture, with its coffee for closers and gong-ringing ceremonies to celebrate new sales is gone,” explained Mike Foy, senior director at J.D. Power. “In its place, the new generation of mobile financial advisors is interacting with clients and prospects via a range of digital channels including social media, text, chat and video.”

Millennials may not have time for check-ins or meetings — and may be reliant on asynchronous communication in order to keep in touch.

Become an advisor to the whole family

If you’re working with a customer base of predominantly baby boomers, it might be a good idea to bring their kids into the discussion. After all, as this article has established, many millennials are relying on generational wealth to build thriving financial futures.

When was the last time you asked your baby boomer clients to invite their children to a meeting?

As Suzanne Woolley and Misyrlena Egkolfopoulou write for Financial Advisor Magazine, many millennials are seeking out a financial advisor for the first time as a result of their rising wealth. 

“Finding a trusted advisor can be daunting if you’ve never done it before,” they write.

Moreover, the logistics of a wealth transfer can be extremely tough on an emotional level.

“I feel like we’re counselors or psychologists most days,” explains Kevin Andrews, owner at Eagle Financial Group, which has a client retention rate of 95%. “The market challenges that we’re seeing these days are unique. We’ve been under pressure to put on our economist hats and respond accordingly. It’s more than planning.”

“Parents in their 60s and 70s trust us to communicate what’s going on with their wealth with their kids,” says Andrews. “Even in the tightest-knit families, the lack of a plan can cause major problems. It’s crucial that everyone knows what’s going on, so families can be on the same page.”

When inviting baby boomers’ children to advisory meetings, the discussion does not need to feel morbid, high-pressure, or stressful. Instead, try to keep the environment lighthearted and kind. Simply say, “hey, it would be great to know your kids and involve them in some of these discussions.”

Create digital media so clients can get to know you

Millennials are known to do their research before deciding to send an email or picking up the phone to call (or text) a service provider.

One way to capture millennial interest is to publish digital content such as blog posts, videos on YouTube, or a podcast. The idea is to share insights to demonstrate your credibility, to establish a sense of trust even before a potential client reaches out.

For inspiration, take a look at the $aving with $ilverman Radio Show, which features discussions about no-nonsense thought provoking topics such as “Black Swan Events” and “Giving Up a Trip to Save Money and More.”

You can also take a look at Women’s Wealth: the Middle Way, published by Susan Michel at Glen Eagle Advisory. Michel has built a reputation for herself, in the financial advisory profession, as an advocate of women who are seeking pathways to building wealth. In her podcast, she touches on topics related to positive psychology, navigating transitions, making the world a better place, and entrepreneurship.

Remember, as you’re developing media, that your goal is to showcase your personality and client service philosophy. What are your values as an investor? How do you solve problems? What is your underlying process for making decisions?

Strong advisor-client relationships are based on mutual understanding.

Embrace your value

Given the rise of ChatGPT and the increasing prevalence of automated advising solutions, it’s easy to feel insecure sometimes about the value you bring. Remember, deep down, that millennials care about your humanity and the service that you’re able to deliver.

“Seventy-nine percent of Millennials consider time spent with an advisor important to their long-term financial success,” explains a recent report from Natixis. “They cite the three most important facets of the relationship as: (1) helping manage volatility; (2) discussing financial planning with family; and (3) having someone who listens.”

As an experienced financial advisor, your value is your ability to listen to your millennial clients as individual human beings — no matter how quirky they may seem as individuals. Listening is key.

Given the general theme of economic uncertainty, your wisdom as a financial advisor is powerful, important, and needed in the eyes of your millennial clients. Walk your talk, and millennials will notice.

About CircleBlack

CircleBlack is an all-in-one technology platform for relationship-focused financial advisors. To learn how our software can help you build, manage, and grow your wealth management practice, get in touch to request a demo.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice.

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