The baby boom generation is no longer the key to the future for financial advisors. The youngest Baby Boomer in 2021 is 57 years of age while the oldest is 75, and their population is declining compared to Gen Xers and Millennials.
To have a successful practice as a financial advisor, you need to attract the younger generations. This means you have to talk the talk and walk the walk—Gen Xers and Millennials don’t identify with the old white guy playing golf stereotype.
Before sharing some tips on attracting the next generation of clients to your practice, let’s outline some vital statistics.
- According to Investopedia, Gen Xers, who fall between Baby Boomers and Millennials, number around 65 million. They are approaching the middle of their working careers and potential peak-earning years and are on track to become the first generation to be worse off in being prepared for retirement than their parents.
- According to Pew Research, Millennials surpassed Baby Boomers and Gen Xers as America’s largest generation with a population of 72.1 million in 2019 and continue to grow as young immigrants expand its ranks. The Millennial population is projected to peak in 2033, at 74.9 million with immigration being the driving force.
- Gen Xers and Millennials will be the most significant wealth transfer beneficiaries in history as Baby Boomers pass down an estimated $68 trillion to the next generations.
Why are the above statistics important? Because in order to attract the next generation of clients (the New-Wavers), you need to understand where they are coming from and where they are going. A lot has changed in the world since the post-World War II baby boom.
Here are four strategies to help you attract Gen Xers and Millennials to your practice:
1. Speak their language.
Don’t come off as a stuffed shirt. The next generations are more casual in their conversations and may not consider themselves “wealthy” or that working with a financial advisor is within their means. Consider referring to yourself and your practice as a “financial coach,” and make sure to update your written communications and training to reflect a more casual tone.
2. Have an active social media profile.
For many Gen Xers who saw the advent of computers and the Internet and Millennials who grew up with social media, if they can’t find you on the Internet, good luck grabbing their business. Make sure to stay on top of your social media presence. This means actively engaging with your followers and posting content that is relevant to Next-Wavers.
3. Embrace diversity.
Just as financial advisors are no longer old white men playing golf, your clients are no longer just affluent white men. The financial services industry helps individuals and families build wealth and must be equally available to everyone. Your practice needs to reflect the next generation of people you will serve; therefore, you should make hiring women, people of color, LGBTQ+, and those with disabilities a priority.
4. Change how you charge for your services.
You’ve seen the commercials; the way advisors are getting paid is changing. Financial practices are moving away from high commissions to fees—the “putting the client first” approach. This approach works well with both Gen Xers and Millennials—Gen Xers are concerned with paying high commissions since they are already behind in their retirement savings while Millennials embrace the social construct of putting morals before profit. Consider offering several different fee options for your clients.
To thrive as a financial advisor, you must embrace the needs and desires of the Next-Wavers. Having a fluid practice that can adapt to the ever-changing demands of clients for generations to come is the key to success. Next up, Generation Z. Are you ready?