Adviser's Consultant: Provide these services to attract younger clients

Millennials need help figuring out where their money goes, not just how to save it for retirement

Jan 26, 2017 @ 3:05 pm

By Liz Skinner

Many who become Pamela Capalad's clients tried to be financially informed, but got lost along the way. Most of the others have been financially lost from the beginning and feel like it's their fault.

Providing financial advice to people in their 20s and 30s requires Ms. Capalad to offer specialized planning services using an approach that builds up clients' financial confidence and knowledge. The hand-holding typically begins over a meal — brunch — to be specific.

The founder of Brunch & Budget typically conducts initial client meetings face-to-face at a restaurant chosen by and paid for by the client.

“The meal gives us something to talk about and an experience that's personal, and they are in an atmosphere they're comfortable in,” said Ms. Capalad, 31.

Her focus on serving millennials and young Generation Xers contrasts with the bulk of financial advisers, who aim for older clients because they tend to have the greatest wealth.

(More: Younger investors most willing to pay for financial advice: Cerulli)

Younger clients may not have much in assets, but they have plenty of financial needs. They often are having their first encounters with home ownership, marriage, caring for children and complex employment benefits, she said.

“Many people hodgepodge their finances together during their 20s and find by the end their financial complexity is beyond them,” she said. “They are to a point where they really don't know what's right for them financially.”

Ms. Capalad's clients, who tend to have salaries in the low six figures, typically need cash-flow planning to help them figure out where their money is being spent, and they require assistance organizing their finances, which she helps them do with eMoney Advisor planning tools.

(More: Advisory firms redesign their offices to attract millennial clients)

“I make more than my parents did, but where is it going every month?” her clients tend to ask during that first meeting.

She also acts as a coach, providing reminders between meetings for actions they need to take to keep their financial affairs on track. Additionally she's taken on the role of financial advocate, jumping on the phone with clients when they have discussions with student loan repayment firms or others, as needed.

Ms. Capalad doesn't manage client assets, though she'll get on the line with a client who is opening an investment account, including helping them complete online account questionnaires at a digital wealth adviser.

Clients have so much insecurity about how they should answer questions aimed at assessing risk, such as, “If the market took a 10% dip, how would you react?”

That's a great opportunity to help educate a client about financial risks and rewards and help them assess how they would genuinely feel about a loss, often probing them further about how often they examine their financial performance and progress towards goals.

TIP SHEET

- Focus on providing the types of services these clients need the most help with, such as figuring out how they're spending their income each month and aiding their financial decisions.

- Consider a subscription-based fee model for younger clients who are used to paying monthly for services, such as cell phones, the gym and Netflix.

- Younger clients usually are receptive to virtual meetings. After the first meeting, Ms. Capalad holds all client meetings via video chat to keep things efficient for her and for clients.

- For in-person meetings, expect to schedule them in the evenings during the week and on weekends, as this tends to be when most busy millennials and Gen Xers can spare an hour or two.

- Use technology to help young investors stay on top of their financial responsibilities. Ms. Capalad uses CoachAccountable software during a meeting to schedule client reminders for the steps they must take over the next few months. The software sends client reminders and alerts the adviser when items are overdue.

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