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Meet the Millennials: Five ways to attract the next generation of clients

Feb 23, 2014 @ 12:01 am

Picture the next wave of clients. They are saddled with more debt than their parents, and they are more risk averse with their investments than mom and dad. Although they have no qualms about raiding their 401(k)s like piggy banks when they bounce from job to job, they are uber-confident about their retirement prospects.

Meet the Millennials. For financial advisers who are lucky, these young people, the oldest of whom are in their early 30s, will choose them and their practices to manage their money and plan for their financial needs.

Sound like a losing proposition? Think again.

Advisers who don't care about the generation born between 1980 and 2000, should. Otherwise, their businesses have no future.

Advisers who don't know how to speak Millennials' language better get fluent, fast. At 78 million strong, Millennials possess buying power of $172 billion, and, surprisingly, they actually value the advice and counsel of experienced advisers.

Those characteristics of Millennials — how they worry about debt yet are optimistic about their financial futures — come from a Wells Fargo survey conducted last year.


The findings of the 2013 Wells Fargo Millennial Survey offer insights into the best strategies for reaching this next generation of asset accumulators.

The survey even offers proof that the odds are quite good that experienced advisers can win over Millennial clients.

Two-thirds of Millennials surveyed said that they would prefer to work one-on-one with an adviser.

Although just 8% of this group works with an adviser, more than half the rest said that they would prefer to work with a seasoned, experienced adviser, so there is plenty of opportunity waiting for advisers.

Depending on how advisers treat Millennials, they stand to gain or lose big.

Researchers have estimated that a wealth transfer of more than $41 trillion will pass from one generation to the next during the next 50 years, in the greatest transfer of wealth in U.S. history.

But here is the thing: Just 2% of children keep their inheritances with their parents' adviser.

Here are five ways to appeal to Millennials.

1. Connect and provide information and insight to Millennials that they can't get anywhere else.

Millennials are always connected. They grew up with the Internet, Nintendo Game Boy, Sony PlayStation, laptops and instant messaging. They are accustomed to immediate and accessible information. They won't be impressed by an adviser who has a website. It is the quality and timeliness of the information that the adviser posts to that website that will wow Millennials. Advisers shouldn't make these guys come to them with frequently asked questions. Instead, post that information to the firm's website.

When Millennial prospects come to advisers, they will have done their homework and will be armed with follow-up questions. This generation prefers to do its own research and come to the experts for information they can't Google.

2. Evolve with Millennials and provide them with more for less — constantly.

Millennials expected computers in their dorm rooms and Wi-Fi all over their college campuses. They will expect their advisers to do more than just explain simple investment concepts. Many of them remember how the Internet bubble burst. They are tight with their parents, and they know that their portfolios took a hit. They understand the concept of risk tolerance. It is the adviser's job to keep up with them and tell them what it all means.

Based on the prevalence of financial information online and Millennials' connected nature with their parents, this group will likely interact with the adviser who has baseline knowledge of financial instruments and resources. As a result, they may not place as much value on an adviser who picks investments because they will likely compare that ability with other sources. If they are already the client of the adviser, they may not place as much value in simply providing an investment update. Instead, they will value the adviser who is able to share information that they likely haven't been able to gain on their own.

3. There is no more 9-to-5.

Millennials don't keep bankers' hours, so neither should their advisers. Millennials crave fluid work schedules. By 2020, it is estimated that nearly half the U.S. workforce will be made up of Millennials. It is important for advisers to know and understand that Millennials view work and their place at their firms differently than their parents. Nine in 10 think that they deserve their dream job and that their company is lucky to have them. Shockingly, two-thirds of Millennial job seekers ask about a company's social-media policies during the job interview, and just over half won't take a job if Facebook and Twitter are forbidden.

Sound a tad overconfident, overly bold? Maybe.

But here is what it means for advisers: They must be available by e-mail and text when away from the office. Advisers should provide alternatives to traditional 9-to-5 office hours.

4. Always provide Millennials with meaning and context.

Millennials seek meaning in all aspects of their lives, from making charitable contributions to finding employers who are active in their communities. These values transfer to their investing behavior.

How do advisers show that they get it?

Conduct workshops for clients and their children to teach them about money. After all, a majority of Millennials in the Wells Fargo survey reported that they value their parents' insight when it comes to money and they wish they had learned more about personal finance in school.

Advisers shouldn't assume the highest-performing investment is the most attractive. Millennials might be more interested in socially conscious investing and would rather seek to invest in companies that value the environment or are free of child labor.

To foster deeper conversation, advisers should make their offices comfortable for Millennials. Think sofas and energy drinks rather than boardroom tables and coffee. If Millennials are comfortable, they will stick around and get to know their advisers better.

5. Advisers should be social and nurture their inner tweeters.

Millennials communicate over multiple channels. They text, blog, Facebook and tweet. They are pinning and Instagramming. All this multitasking across social media and the Internet has made Millennials scanners of information. They aren't comfortable with formal communication.

Recommendations for advisers: Master a variety of communication vehicles, such as texting, tweeting and blogging. Advisers may need to hire a social-media consultant, which is easy to do. Many Generation Xers and Millennials freelance social-media services.

Advisers also need to provide immediate responses to younger clients' questions or ensure that someone else is able to follow up.

Wayne Badorf is head of intermediary sales for Wells Fargo Asset Management and president of Wells Fargo Funds Distributor.


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