Clients'
needs have evolved greatly over the past 20 years, and those who evolve with
them will earn their business.
By NELSON LEE For
AdvisorNews
February 13, 2019
As millennial consumers increasingly
become a considerable force in our economy, many firms and brand new markets
have emerged solely to benefit this age group. Millennials will become a bigger
part of the overall market as time goes on, both in online and offline
consumption of products and services.
This raises the question for
advisors: How can we meet the demands of these 21st century clients in a way
that is attractive to them and will let the advisor stand out? Clearly, the
cookie-cutter approach of applying methods and strategies used on their parents
will not work, and a new approach is required.
When it comes to targeting the
millennial age group (those born between 1981 and 1996), it’s imperative to
first understand their tendencies and value system. The key differentiation in
how millennials often make an investment decision these days is much less
relationship-oriented than their predecessors in Generation X (those born
between 1965 and 1980). Millennials are a lot more focused on hard statistics,
scientific methods, historical trends and technology-focused ways to analyze
and invest efficiently. In simple words, compared to those of older generations,
they are much more likely to make an investment decision because they believe
in the methodology and statistics, as opposed to having personal relationships
with advisors.
In contrast to their younger
counterparts, Gen Xers take different things into account when making financial
decisions or selecting who to trust with their money matters. For
example, working at a well-known firm, the number of years worked
in the industry and age are all major factors Gen Xers consider when choosing
an advisor. Millennials, on the other hand, are more comfortable investing in
solutions provided by startups or lesser known brands.
Millennials are perfectly happy
going to fintech startups for Robinhood or Yield Street, for something as
exotic as litigation financing as an alternative investment without ever seeing
a representative in person. Their parents, however, are much more likely to
trust going to a traditional bank such as Wells Fargo, or to historic names
such as Edward Jones or Merrill Lynch, and meeting an advisor in person to
build trust and determine if they like the advisor’s personality. It's a
totally different ball game.
With the above analysis in mind,
here is the best way to market to the majority of millennials. Presenting
millennials with rich resources, readily available online, is a good tactic,
followed up with offering guidance as to which information is most crucial to
read and understand. Guiding millennials toward educational information,
important statistics and in-depth analysis reports will go a long way in
gaining their trust.
Guiding, instead of teaching, is the
key to reaching millennials in the age of the internet, since there are very
few secrets advisors can hold back when information is readily available
online. This contrasts with Gen Xers, who came of age before the information
age and relied heavily on advisors to give sound advice, as alternative sources
of information were limited. Millennials have the opposite problem of having
too much information online, much of which is either misleading, biased or,
worse yet, just opinions disguised as facts.
The millennial generation has
shifted its attention from “who offers the most information," to “who can
help filter out incorrect information." If an advisor gives a millennial
an investment strategy and, at the same time, helps them avoid future
misinformation or scams, that advisor will earn a client for life. In addition,
understanding the role of technology and implementing it will help navigate the
treacherous waters of information overflow.
Today's advisor should be much more
like a smart analyst that just happens to be able to communicate to a client,
rather than a traditional salesman that can sell anything and just happens to
be in the advisory business. Clients' needs have evolved greatly over the past
20 years, and those who evolve with them will earn their business.
Nelson Lee is managing partner of PacWealth Solutions.
Nelson may be contacted at nelson.lee@innfeedback.com.
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