Rethinking financial planning for Millennials

Rethinking financial planning for Millennials

Many financial advisers steer clear of younger clients in the belief that they don’t generally have much to invest and are too young to be interested in retirement planning.

However, the massive potential of this group cannot be ignored. The intergenerational transfer of wealth from Australian Baby Boomers to their children over the next 10 to 20 years has been estimated at up to $3 trillion.

And despite what some planners might think, there is a high earning Millennial cohort; the so-called HENRYs – high earners, not rich yet.

Some planners, many of them Millennials themselves, have structured their entire businesses around engaging this group. The strategy relies on the expectation that if these young clients are serviced in the way they want to be serviced, they will remain loyal to their planner until they hit their peak earning and investing years and beyond.

Much has been said, both positive and negative, about the defining characteristics of Millennials; those people born between 1981 and 1996. We’ve all heard the stories about how they are narcissistic and obsessed with fame, self-promotion and avocado on toast.

However, more positive traits attributed to this group include:

  • Tech savviness
  • Expert multi-taskers
  • Socially conscious
  • Information seekers
  • Scepticism about ‘big business’ – they appreciate ethics and transparency in marketing and don’t respond well to the ‘hard sell’.

So, what does all this mean for financial planners seeking to engage Millennials? One of Lifespan’s authorised representatives, Arkadiusz Bryl, founder of Real Knowledge, Diverse Solutions, is an expert at reaching younger clients through digital marketing. Arkadiusz regularly advises other planners on digital marketing and how to engage younger clients. He believes many financial planners overthink their approach to servicing younger clients.

“Ultimately, they want exactly what Generation X and Baby Boomer clients want, which is a secure financial future. They just want to go about it a different way.

“They might not want ongoing advice yet, but they do want help when major events occur in their lives such as getting married, having children and getting a promotion.”

Millennial’s do however seek complete transparency, in an age where you can find almost anything on the internet they appreciate when you lay everything out on the table and share or even involve them in the advice process.

As a licensee, I agree with Arkadiusz and can appreciate that traditional methods of engagement do not resonate well with Millennials and a different approach is required. Statistics show that more often than not, when an existing client’s wealth is transferred through a life event, the servicing adviser loses relevance and the beneficiary of the outcome will seek advice from somebody more attuned to their way of doing things.

Millennials are taking a greater interest in all things financial. They want to be well informed and are not afraid to seek assistance – but the engagement piece for most older advisers remains a challenge.

Where many firms get it wrong is believing that the service model needs to cost a lot of money. The broader adoption of many modern technologies means that the cost per client can come down significantly. Advisers need to accept that not every interaction has to come at a cost to the client.

What Millennials don’t want is to be told by an adviser, ‘come back when you have $200,000’. I guarantee you’ll never see them again if you take that approach.

A fresh approach to client engagement

The traditional approach to engaging clients just doesn’t work with Millennials. They don’t respond well to being told they should have particular investments or insurances. They want to be educated and make at least some of the decisions themselves. With that in mind, Arkadiusz begins his initial client meetings with a visual fact find.

It is a ‘no pitch, no sell’ proposition in which the prospective client is taken through a series of simple steps which shed light on their actual financial position. The simplicity of the process is also a pleasing contrast to the information overload that is so prevalent in modern society.

We took 120 people on a visual journey of their goals, needs and objectives by hosting an event where we provided everyone an empty “visual fact find” and I teamed up with an illustrator where we took everyone on a live journey on how to “smash goals, not avocados”. We provided no advice and 87 attendees left reviews that they learnt more about their financial life in 2 hours than in their whole life. Which made me think. Why can’t I do this on an even bigger scale.

The propensity for Millennials to educate themselves also makes content production crucial for advisers targeting this group. This might not be everyone’s cup of tea as it requires a significant time commitment. Arkadiusz has developed free ‘lunch and learn’ events in which he educates potential clients about developing a financial plan. He’s also created catchy titles around the content he produces such as “How to rob a bank without a gun”.

Millennials respond more positively to word-of-mouth endorsements than traditional advertising, therefore, social media is an ideal channel through which to engage them. Mass marketing through social media is also an effective way to keep costs down. For example, Arkadiusz posts videos to his audience of more than 1,000 Instagram followers every day, also often on weekends, and hosts a free group chat event online every week.

As I’ve mentioned, this business strategy would not suit most advisers, particularly those with no grasp of digital marketing.

Arkadiusz has few clients on retainer – he works with most of them on a transactional basis. His model relies on scale for its success. It also requires a constant flow of new content for social media feeds.

Critics might say that he is giving away too much of his time and intellectual property for free. But his response would be that by keeping them happy now, he is building a base of loyal clients who will be with him throughout their peak earning years and beyond.

Remember, the core values of Millennials are community focus and social responsibility – both in clear evidence here.

Share this post

Share on linkedin
Share on facebook
Share on twitter
Share on email