Serving the Client of the Future

Serving the Client of the Future

The heirs of baby boomers have started to impact the way advisors do business

For years, we’ve been talking about the aging of the baby boomers, their impending retirement and the anticipated impact on society and the marketplace. That time has come, with as many as three in four wealthy families working on leadership transitions. What hasn’t gotten nearly as much attention, until recently, is the impact the baby boomers’ heirs will have on the way advisors do business. Advisors are now realizing that serving the next generation of wealth owners, younger clients in their 20s to 40s, necessitates some changes to their approach. These shifts, along with the graying of many advisor teams, are impacting the advisory community from the inside and out: 


Families will continue to scrutinize their advisor relationships, with emphasis on transparency, alignment of interests and risk management.   

As the next generation of wealth owners comes into its own, advisors are responding to client needs by adjusting their communication style, their services and even their attire. 

New technologies are reshaping the customer experience, making the presentation of financial concepts more relevant for entrepreneurial owners.

There’s a rising generation of clients, but will there be a generation of younger advisors ready to meet their needs? 


Advisor Relationships Scrutinized

“Partner with me, but on my terms.” Advice-seeking families continue to place a high premium on transparency, alignment of interests and new views on risk management.

Geopolitical, macroeconomic and regulatory uncertainties are contributing to strong demand for professional advice. Numerous Family Office Exchange (FOX) surveys indicate that—depending on the type of advisor—between 25 percent and 50 percent of families are either planning to seek or are actively seeking advice from an array of investment and integrated planning specialists. This trend will likely outlast current market conditions, as a more collaboratively minded next generation exerts its influence. For example, our research shows that families are asking advisors to perform new services. Here are some quotes from advisors: 


“Families are looking to have [our firm] play more of a consulting role [and to] assist in corralling existing advisors.” 


“We are seeing more demand to serve as an outside consultant and advisor to the family and to work as an outsourced CIO.”


Many families are scrutinizing their advisory relationships, from experience level to operational soundness to potential conflicts. This reality has begun to influence the advisory community. (See “Under Scrutiny,” this page.)

Advisors are providing greater transparency, minimizing conflicts and helping to manage risks to engage ultra-wealthy clients; many firms are also revising the “service value” conversation. Firms are focusing more attention on their clients’ goals and their abilities to use planning services—especially tax and estate planning—to meet these goals.  


Responding to Clients’ Needs

Advisors are getting rid of the blue suits: From attire, to communication strategies, to services, firms are responding to the needs of the next generation.

Leading companies are deploying staffing, servicing and technological strategies to connect with younger clients. On the staffing front, firms are pairing next generation clients with “relatable” members of their own teams (for example, younger staff members).    

From a servicing perspective, family offices and advisory firms are proactively addressing the learning style preferred by younger clients, by mentoring rather than educating them. Many are including the next generation in decision-making processes to respond to these clients’ desire for inclusiveness. Says one seasoned family office CEO: “I talk to every family member at least once a week, including and especially members of the next generation. That’s how you manage succession and transition risks.” At a minimum, most firms are assessing the needs of younger clients and the implications for the firms’ service models. (See “Here They Come!” this page.)


New Technologies

Wealth management meets the iPad: New technologies are reshaping the client experience.

Perhaps the biggest impact of the next generation will be the integration of new communication tools and technologies into the client service experience. Generation Y (the Millennials) has grown up in a technologically advanced world. Their advisors, therefore, are experimenting with social media and new technologies and rapidly updating usage and security policies for new modes of communication. Social media and new technologies shouldn’t simply “push” information to clients, but should, ideally, make the client feel more involved in and connected to the service experience.

Among other tactics, multi-family offices are giving tablet computers to clients for use in client meetings, as well as e-readers preloaded with educational materials. Insurance providers are staking a niche in the interconnected world of social media by helping clients manage communication and privacy risks. These firms are developing new social media policies for clients and helping to implement best practices. (See “How to Use New Technologies,” this page.) 


Knowledge Gap

Even in the midst of a weak economy, many FOX members are hiring younger staff, especially in client-facing and revenue-generating roles, and demand for talented advisors will eventually outstrip supply. Although there are some notable exceptions, relatively few firms have well-resourced training programs for developing “home-grown” talent. 

As a large number of managers and advisors alike are contemplating their own retirements, succession-related issues are moving to the forefront of industry concerns. (See “Home-Grown Talent,” this page.)  


The Shoemaker’s Children

Responding to the needs of the next generation of clients by tweaking communications strategies and fine-tuning service delivery are steps in the right direction, but they’re only the beginning. Leading wealth advisors advocate taking the long-term view when it comes to integrated planning, putting the interests of the family and their long-term goals at the forefront. The firms and family offices that will be around to serve their clients for years to come will be the ones who take their own advice. They’ll be the ones who look to the future now, investing today in tomorrow’s client-servicing teams.