#EpicFinancialAdvisoryFail Alert: Why you can’t sell me, the Millennial

Posted by on

There’s only one reason you should read this blog post: I am a Millennial so I know just how much risk your advisory firm faces in failing to address the 15.7 million young professionals who are accumulating wealth in this country. Some $30 trillion will pass from boomers to Millennials over the next 30 years, and our coming of age will impact the American economy as much as baby boomers did in the 60s, 70s, 80s and 90s. Yet, we aren’t going to do business with you. In fact, surveys show that 98% of children do not keep their inheritances with their parent’s advisors.

Part of it is simple timing. The average advisor in the industry is age 49 and many will be winding down their careers as I reach my prime earning years. But more than that, I am not like you. I don’t think or act like you. I am more skeptical and suspicious. A self-service consumer who is more likely to value an online friend’s opinion than that of a professional. I am not going to your seminars. I don’t belong to your country club. In fact, I am why country club membership has cratered in this country since the 1990s. You are more likely to find me online and engaged. The only problem is that your firm isn’t online or engaged. At least not to the same degree as me.

What’s a firm to do? What with all your seasoned investment professionals gainfully employed serving boomers, just like themselves, while failing to look over the horizon? Well, if you are serious about losing your account base over the next 10 to 15 years, here’s a roadmap for alienating prospective Millennial clients:

1)      Increase account minimums. Go ahead. Chase us away with high minimums we can’t yet meet. Push us off to low-cost mutual fund and ETF companies or no-minimum, low-fee advisories like Betterment, Wealthfront or Personal Capital. Let them indoctrinate us to the convention of investing, instead of learning to trust an advisor for personal financial advice. And once gone, don’t think I am coming back when the big inheritance comes in or my software company is acquired! I will have already found a home in the world of investing.

2)      Keep recruiting those wirehouse refugees and custodial branch staff from Fidelity, TD Ameritrade or Schwab. Yea. They are really going to speak to me, what with their Brooks Brothers suits and Ivy League degrees. Why would you even waste time recruiting and training recent college graduates who naturally know how to source and find me using their own vast social media networks? After all, I could never relate to anyone who shares my love of craft beers, farm to table dining, alternative music, and fantasy football, or could I?

3)      Reject social media as the fad that it is and not an important form of communication. How many times have you heard this? “My clients aren’t on social media and even if they are, who are they going to believe? Someone on Twitter or Facebook or someone who has been at this business for 30 years?” Really? Um, well actually, every study shows that Millennials trust and value the wisdom of the crowd over real world advisors—whether it’s about buying a home or losing weight. Millennials are the ultimate hunters and gathers, seeking out information on their own—and online—and relying on it to form opinions and make decisions. Social media is here to stay, an established part of the Millennial culture, ignore at your own risk. And here’s what’s even scarier: if your firm is not using social media, other advisors are. And they are posting, commenting, and building awareness with young professionals who will dominate investing in the years to come.

Remember the next wave of investor, the Millennial, is a generation formed by technology, financial crises and cultural shifts that have taken place over the past 20 years. Instead of boozy country club dinners, they are more likely to be on their phones, engaging in online communities that share their lifestyles and interests. For some firms, that’s just too foreign of a notion, a ticking clock that will shorten their own lifespans.  But for those who understand the opportunity before them, Millennials, and the wealth they will build, inherit and manage offer the next great opportunity to build a contemporary advisory that knows how to capitalize on the changing face of investing.