They're young, they're skeptical and they're used to getting lots of information from the online communities they've helped create. And now that their companies are being acquired or prepped for an initial public offering, they're also about to become very rich.

Meet the social media multi-millionaires and billionaires, the Generation Y set that built and was first to understand the magnitude of social networking sites like Facebook, Twitter, MySpace and LinkedIn and represent a golden opportunity for financial advisors savvy and skilled enough to track them down in their native habitat.

For large investment houses and independent financial advisors, this new crop of potential clients-- and the commissions they generate-- is as elusive as it is exclusive. They've tweeted about Bernie Madoff and IAG. They've seen the YouTube clips of excised Lehman Brothers analysts wandering around Lower Manhattan in a state of shock and bewilderment. They've "friended" Ben Bernanke.

Now that the economy is showing some semblance of recovery and the IPO market is heating up -- IPO Monitor reports 26 U.S. companies have filed with the SEC in the past two months -- financial advisors would be well advised to start figuring out how they're going to reel in some of these young, smartphone-addled whales.

"In a lot of ways it feels like the 90s all over again," said Stacey Haefele, president and CEO of HNW, Inc., a marketing firm catering to premier financial services institutions including the likes of Deutsche Bank, Charles Schwab and Prudential. "Except this generation is a lot more savvy and can sniff out a disingenuous sales pitch from a million miles upwind."

Two weeks ago, LinkedIn, the supposedly more "professional" of the major social networking sites, filed for a $175 million IPO with Morgan Stanley, Bank of America Merrill Lynch and J.P. Morgan Chase & Co. serving as lead managers for the offering.

While this new generation of super rich may have an arsenal of mobile apps at their disposal and an expansive network of "friends," colleagues and contacts, they're still young and still prone to making the kinds of investment mistakes that befell an earlier generation seduced by the long-term investment prospects of companies like and Webvan.

"In general, these newly wealthy clients don't have a great deal of sophistication when it comes to understanding markets," Haefele said. "They've received the mass consumer message about money-- 401ks and the like-- but the problems they typically fall prey to is having concentrated stock positions and liquidity issues because they like to spend like they're rock stars."

From the broker-dealer and financial advisor perspective, getting at these coveted clients requires not only an appreciation for the social media in which they're so deeply entrenched but a willingness to actively participate in it.

"You have to be where they are," Haefele said. "Be on LinkedIn and Facebook. They're telling you a lot about themselves in these channels. These are great resources for building up a prospect pool and finding out how you're already connected to them."

Financial advisors who may be spooked by FINRA's guidelines for social media participation need to get over it and just make sure they have the IT platform in place to monitor and save all their social media dispatches.

Haefele suggests reading these potential clients' blogs -- or perhaps starting one of your own and posting comments linking back to yours on their sites -- and doing everything possible to elevate your profile so you show up prominently on any Google search for financial advisor and the like.

While this group of potential, deep-pocketed investors is very small -- maybe 3% of all clients -- they're often so busy with their next entrepreneurial endeavor or social engagement, Haefele said, their cost to serve is minimal and they're a referral goldmine.

"We talk to a lot of advisors and what we hear is that these clients are among the nicest clients you can have," she said. "They've suddenly come into a lot of money and need advice but they're not super engaged. And they and their friends all got rich together so if you can get one, you can get the others."

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access