Practice Management

Advisers have much to learn about next generation clients

Millennials are savers — not so much investors — and other important info about this set

Sep 12, 2019 @ 12:00 pm

By Jay Cooper

Millennials remain largely underserved by the financial advice industry, and it may not be due to their disinterest in working with advisers. Instead, advisers may be underestimating the opportunity and misunderstanding the needs of millennials.

The toughest part in getting advisers to connect with millennials is often convincing them that they should, said Amy Webber, president and CEO of Cambridge Investment Group, at the InvestmentNews Women Adviser Summit in Denver on Tuesday.

[More: 10 ways to create a memorable client experience]

Understanding the opportunity of millennials starts by busting several myths about the generation, Ms. Webber told about 170 mostly women advisers. The first myth is that they have no money. In reality, one in six millennials has saved at least $100,000 in cash vehicles.

"They've saved it with no guidance," she said. "Imagine what they could do with actual advice."

Many millennials also are saving at a younger point than prior generations, which means their wealth will have more time to accumulate. Only 9% of baby boomers and 14% of Gen Xers started investing before age 21, compared to one-third of millennials, according to 2018 research from CFA Institute and Finra Foundation that Ms. Webber cited.

Another common millennial myth is that they don't trust advisers and only want robo-advice, Ms. Webber said. But 72% of millennials surveyed said they are "extremely" or "very" satisfied with their current financial professionals.

[Recommended video: Next generation clients want advisers to help them live better lives]

To tap into the millennial opportunity, advisers may need to deconstruct some myths this cohort has about them. For instance, the cost to work with an adviser. About 77% of millennial investors believe it would cost them 5% of their investible assets, the CFA-Finra Foundation research found.

Advisers could better connect with millennials by recognizing that they are savers, but not so much investors. Planners need to convince this generation that they may be sacrificing wealth by not putting more of their savings to work sooner, Ms. Webber said.

An educational approach will work best in winning their business, she said. "They want a teacher, not a friend."

Perhaps not surprising to most advisers, Ms. Webber also said millennials demand mobile and digital access. They are used to simple and quick interactions and will go elsewhere if they don't get such an experience with their financial advice provider.

[More: Check out InvestmentNews' Women Adviser Summit on Twitter]

InvestmentNews is hosting two more Women Adviser Summits in 2019, in San Francisco on Oct. 22 and in New York on Nov. 19.

Jay Cooper is a freelancer writer in Denver.

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