Understanding Generational Differences Can Help Build Your Practice

Understanding Generational Differences Can Help Build Your Practice

Each generation has different expectations from you. Your knowledge will help with acquisition, retention and a healthier practice built on satisfied customers at every stage of life.

Financial advisors face tough challenges these days -- some typical, some not so typical.  

Typical:  asset retention, client acquisition, practice management.

Not so typical: Doing all of the above across the five generations alive today --- all of whom have unique needs and different sensibilities.

It takes a savvy advisor with a working knowledge of generational differences to navigate in today’s environment.  Many advisors risk alienating potential and existing clients with a semantic slip, a word that resonates wrong, advice to someone younger that should have been reserved for someone older. 

Knowing your clients and their generational tendencies rates as high in importance as your best pitch or best-selling service.

Still, some advisors remain flummoxed by generational differences either because they don’t understand them or don’t care to.  A one-sized-fits-all approach, they think, may have worked before, so why adapt.

But the stakes are too high and failure to understand generational differences increases the risk of crippling your business while driving clients elsewhere.  First understand who’s who.  Traditionalists were born before 1946, Baby Boomers (1946-1964) followed, Generation X (1965-1979) and Millennials (1980-1995) came next, and a new generation, Generation Edge (after 1995), is emerging. 

To know the specifics of each generation, you have to understand the events and conditions that influenced their formative years, roughly their teen years. It’s this time during brain development that you’re coming to terms with the world around you. The events, conditions, roles models, pop culture of the time have a huge impact on how you view things like money, wealth, risk and politics while creating generational traits that are carried into adulthood.

To remain unaware of these defining conditions can be a crucial mistake. Advisors need to understand where a person is coming from if they expect to become a trusted partner and a reliable resource – whether the client is 70 or 27.   Each generation has unique traits that advisors can use as the basis to help build a relationship that is deeper, more fulfilling and long-lasting.

If you shrug off generational differences and commit to an outworn, tried-and-true approach, future financial shifts could wipe out your business like a tsunami speeding ashore. Consider that over the next 50 years, clients will transfer $59 trillion in wealth from one generation to the next.  Nine out of 10 prospective heirs will ditch their parents’ financial advisors for new ones. A full third of working financial advisors will retire in the next 10 years, leaving clients and prospects to search for new advisors who understand their unique and sometimes idiosyncratic financial needs based on generational profiles.

Meanwhile, clients across all generations are still reeling from events that pummeled their portfolios over the years. Depending on their age, memories linger of the Great Depression, dot.com bust or the housing crisis that tanked global markets and led to the Great Recession. These financial events represent additional reasons for finding the right advisor who will understand their motives and protect their investments.

The solution is to sharpen the targeting of your financial advice to clients and prospects of all ages.  Show that you can offer tangible insights into the minds of your multi-generational base and influence their decisions based on their life experiences.

Actively reduce the loss of assets as wealth moves from one generation to the next. Take the time to reach out to clients' children before they seek out their own adviser.  After all, 75% of clients have said that their children have never met their financial advisor. Don’t let the opportunity slip away. And have the tools to reach those children. Printed brochures, hour long presentations and prospectuses may work for older generations, but not for the younger ones.  The younger generations are digitally driven, raised with smartphones, tablets, and blazing fast, ubiquitous Internet access to information on web sites and social media.

With the growing size of the younger set, bulk up on e-learning options, short videos, webinars and infographics.

Knowing cross generational difference is essential – not only for connecting with a new client or an heir, but for managing your practice.  Becoming a multi-generational family advisor pays long-term dividends, but it requires work.  Many advisors in their 50s may believe they’re pretty much set and don’t need to worry about emerging generations.  In fact, it may be the perfect time to bring in a younger advisor to help transition the business into a profitable future by helping older clients’ children or grandchildren.

Even if an established advisor is not building his or her practice, recruiting someone younger could help a seasoned advisor navigate the lingo-riddled, semantic haze created by the younger crowd. At the same time, an experienced advisor could help younger ones build credibility among Traditionalists and Baby Boomers to build their business.

Finally, understanding generational differences can lead to unexpected benefits:  better relations with co-workers, family and friends and an increased appreciation for likes, dislikes, habits and behaviors of people of all ages in personal circles.  

So, accept generational differences and understand them.  Leverage them to make your business grow and avoid lumping your base of prospects and clients into one generic bunch.  Each generation has different expectations from you.  Your knowledge will help with acquisition, retention and a healthier practice built on satisfied customers at every stage of life, every level of affluence and every generational experience.  


Lori Dorsey is the senior vice president, director of marketing for Ivy Investments (formerly Ivy Funds).  

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