Why communication is the ‘Secret Sauce’

Wealthy young investors want your help, but they also want to be engaged with what you're doing on their behalf.

They’re wealthy, concerned about the future and demand customized financial advice. But more than anything else — to paraphrase the old real estate adage — succeeding with Gen X and Gen Y investors is all about communication, communication, communication.
While they may not state it explicitly, younger investors view you, their financial adviser, as an expert partner. They expect you to know more about financial and investment matters than they do, which is why they want your help, but they also want to be engaged with what you’re doing on their behalf. And that’s why communication is so important.

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With that in mind, I’ll let you in on a rule used by speech writers to structure a presentation that can help financial advisers communicate: Tell them what you are going to tell them; tell them; then tell them what you told them.
In essence, you should hammer home the same point three times with a preview, the actual message and a review.

What to say

Here’s an example of how you can communicate your position on communication (how’s that for communicating?) when you first meet with Gen X and Gen Y investors:
“Joe/Jody, we’re going to sit down at least once a year for a full-scale review. In addition, I’m going to give you a call periodically. But call me anytime you’re worried about something or if something comes up. You’re also going to get electronic communication from me, probably at least once a month, but more if I see an opportunity or a new idea that might work for you. Does that sound right to you, or would you like me to communicate with you in other ways?”
As you actually take these steps and meet in-person and via email and phone, review what you’ve done and remind clients again of what’s coming up. If that sounds like overkill, it isn’t. As we found in our recent MFS Investing Sentiment Surveys, advisers simply cannot overdo communication with their younger clients.
• 63% of Gen Y investors and 44% of Gen Xers have increased the amount of information they ask for from their financial adviser over the last 12 months. That compares with just 32% of Boomers who have increased their information requests.
• 51% of Gen Y investors said they expect their adviser to call, email or visit them right away if the Dow Industrials were to drop significantly, by say 5%. By contrast, 24% of Gen X investors and 7% of Baby Boomers expected that kind of immediate communication.
• Across all age groups, about 70% of investors expect their adviser to contact them regularly during times of market volatility.

Seeking reassurance

And what do Gen X and Gen Y investors expect when their advisers reach out to them?
Most times — 68% in the case of Gen Xers and 56% for Gen Y investors — they want reassurance that their plan is still on track and that their assets are adequately protected. Just 49% of Boomers demand such reassurance. Gen Y investors (44%) also want to get an explanation of market events and their implications, compared with 30% of Gen Xers and 39% of Boomers.
One more point about communicating with younger investors: They want their advisers to speak to them in English, not ‘Finglish’ — the financial jargon so many of us in the advice business lapse into automatically.
In our next blog, we’ll look at ways to communicate so that Gen X and Gen Y investors really understand you.

About the Series

Financial advisers seeking to expand their business may not be aware of the potential afforded by Gen X and Gen Y investors. Wealthier than most advisers realize, these younger investors want help. But their expectations of advisers are different from those of Baby Boomers. Using data from his firm’s extensive Investing Sentiment Survey, William Finnegan, Senior Managing Director of Global Retail Marketing at MFS Investment Management, offers insights into tapping this huge, underserved market through a series of six articles.

About the Survey

MFS, through Research Collaborative, an independent research firm, sponsors a regular online survey among individual investors with $100k+ in household investable assets and who make or share in making financial decisions for their households. Generation Y investors are those under the age of 33; Generation X is defined as investors between the ages of 33 and 47.

About MFS Investment Management

MFS is a premier global money management firm with investment offices in Boston, Hong Kong, London, Mexico City, São Paulo, Singapore, Sydney, Tokyo and Toronto. The firm’s history dates to March 21, 1924, and the establishment of the first US “open-end” mutual fund. MFS manages $293.4 billion in assets on behalf of individual and institutional investors worldwide, as of August 31, 2012.
Please visit MFS.com/InvestingPulse for more information.