Your IndustryMar 31 2022

How to capture the attention of younger clients

Supported by
Schroders
twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Supported by
Schroders
How to capture the attention of younger clients
Credit: fauxels from Pexels

For businesses that charge based on assets under management, the profit margins associated with millennials – the generation that a client’s children may fall into – could be regarded as relatively low.

But Oliver Bourke, managing director at Mercury Wealth Management, says that seeing clients as individuals without looking up and down the generations is a “blinkered” and short-term approach, which will ultimately lead to diminishing client numbers in a business.

Francesca Smith, private office financial planner at Jarrovian Wealth, likewise says it is very short-sighted to view millennials as low value clients. “It is very likely that in the future, both through career progression and potential capital events such as inheritance, that [millennials] will likely become higher value clients for you.”

While Smith says the value for Jarrovian is with the client rather than their money, she adds: “With the way property prices have exponentially grown in the UK, many of the baby boomer generation have accumulated sizeable assets. This wealth will eventually cascade down and those in receipt will be seeking advice and guidance at this point.

“At Jarrovian, we are very focused on engaging the next generation of our clients’ families. Inevitably the wealth will be passed on, and it is fundamental to the continuation and succession of Jarrovian for us to be able to assist and engage the next generation of our clients.”

Don’t assume a 20-year-old is excited for their retirement.Josh Richardson, Informed Financial Planning

When it comes to working with multiple generations, advisers should acknowledge that they will tend to be shaped by different circumstances, says Chris Bishun, investment solutions director at Brooks Macdonald.

“The new age of investors face different challenges when compared to their predecessors. People’s attitudes towards their personal finances have also been shaken by Covid-19, causing a refocus of priorities.

“In 2020 alone, students in England graduating from university incurred an average of £45,000 of student debt. This has created competing saving needs, such as saving for a housing deposit for longer [and] starting pension contributions, while paying down debt.”

Josh Richardson, chartered financial planner at Informed Financial Planning, agrees that different generations will have different motivations. “If you’re not in the same age category, don’t assume a 20-year-old is excited for their retirement at age 65, it’s just too far away.

“Milestones and goals have changed dramatically and it’s not everyone’s goal to get on the property ladder, get married and have two kids and a dog. Don’t try and push your own life experiences or ideals onto this generation, as it may be way off the mark of what they’re looking to achieve.”

Spin-off services

Many advisers are reluctant to work with next generation clients, as they do not have a proposition for them and are concerned about profitability, says Gillian Hepburn, head of UK intermediary solutions at Schroders.

“Our adviser survey indicates that the number of advisers who are prepared to advise clients with less than £50,000 to invest is reducing year-on-year, and is now only 39 per cent,” says Hepburn, who suggests conversations about wills, trusts and power of attorney as one way to begin engaging the next generation.

Some businesses have also created offshoot digital services as a way to engage younger clients. Indeed, Richardson is one of six young employees who manage Informed Generation, his employer’s offshoot service for millennials.

“Informed Generation is a more relaxed approach, as our research indicates that millennials and gen Z are less likely to be receptive to a corporate tone of voice,” says Ellie Dickens, business development assistant at Informed Financial Planning, who also manages the service.

“Our research tells us that the younger generation want a fast-paced, digital and informal service, with as little communication as possible. Often, this generation is happy with regular text or email updates, and recommendations that are short, snappy and straight to the point.

“This also works on the business side of things for firms. Less face-to-face and telephone communication means costs are kept low, making the service profitable. This is an extremely important factor when millennials and generation Z want a low-cost service too.”

The goal of Informed Generation is to help clients’ children to start managing their money early on from an educational perspective, says Dickens. “But to also remind them that when the time comes for them to inherit their parents’ investments that we already look after, we are here as their financial advisers.

“They already know us and are aware of what we do, and ultimately, they turn to us to help guide them through that transition process.”

Simon Martin, managing director at Moreish Marketing, a financial services marketing agency, likewise says that moving straight to advice could feel intimidating. “Maybe there is a step before that of general education and opening up the conversation through relevant financial brands or advice firms.”

A younger audience does not want to be ‘sold’ to, adds Martin. “They can smell inauthenticity a mile off. Advisers that are invested in building strong relationships and actually care about the clients they work with, and [are] wanting to help the next generation from a genuine point of view, helps younger people see that financial matters can be a really positive enabler in their lives, and not something that they need to shy away from.”

Another business that has set its sights on a millennial client base is SpringGen. The business, which targets an audience of young professionals aged between 25 and 45, was founded by Jenny Madhoo after having to turn away millennials because services were not designed to meet their needs.

“We’re an offshoot of a pre-existing financial planning company, which is Acumen. Obviously there’s a pre-existing set of clients there of a more traditional financial planning client profile.

“Those people have children and grandchildren, and they are looking for support for those members of their family. Now that we have SpringGen within the group to refer people to, it’s becoming quite an efficient funnel to get younger generations of the family involved, and get them going with financial advice.”

The business offers two services: a ‘money action plan’ (from £195) and a ‘money management’ service (from £375). “Looking at young people as not profitable, I feel like that’s quite a short-term viewpoint,” says Madhoo.

“If you base everything on the ‘standard’ percentage based model, then maybe they are, or would be. But if you apply a bit of creativity to the scenario and find a different service model, then they don’t have to be unprofitable.”

Chloe Cheung is a features writer at FTAdviser