Courting Gen X now Plan A for advisers

Targeting children of existing clients crucial for firms eager to prosper long-term; there is no Plan B

May 7, 2012 @ 7:18 am

By Dan Jamieson

Advisors risk losing substantial portions of their client base if they don't figure out how to connect with the children of their clients, said Darla Sipolt, vice president of sales at TD Ameritrade, Sunday at the Financial Planning Association annual retreat in Scottsdale, Ariz.

The children of baby boomers will inherit $18 trillion over the next 35 years, she said.

“Seeing the clients' kids as prospects is absolutely critical,” Ms. Sipolt said.

Advisors should think about creating new, lower cost models with less service options, she said, and provide information through video and other online formats.

Young clients expect “instant response, anywhere, anytime,” Ms. Sipolt said. “Meeting during office hours and quarterly meetings is probably not going to work.”

Ms. Sipolt cited results from a TD Ameritrade-sponsored survey of investors young and old.

Planners also need to consider bringing in junior advisors of Generation X or Y, she said, to attract younger generations as clients.

“If you don't have someone who looks like them, it won't work,” she said. “Gray hair won't help.”

Firms that offer a work-life balance with flexible hours and mentors, and provide a clear career path with a chance at ownership, will appeal to the younger adviser recruit, Ms. Sipolt said.

“Firms with a deep bench have a lot more value than those that don't,” she added.

Younger generations tend to rely on friends and relatives for financial information, but they did report that they got their first investment education from financial professionals, Ms. Sipolt said.

Try getting at the kids with the help of their parents, she advised.

“Generation Y really does value face time” with professional advisers, said Kent Smetters, president of Veritat Advisors, which uses an online planning model to serve younger investors and others with fewer assets.

While young people may get information from their cohorts, “they don't necessarily trust their friends,” Mr. Smetters said during a separate presentation at the FPA retreat. “They want the advice of an expert” who communicates with them in the way they want, he said.

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