Starting out as a young financial planner isn’t easy. After all, you have no track record, no referral base and no real-world experience, yet.
The sell-to-your-friends approach often doesn’t work, either. When I started out, I was 21 and determined to use a fee-based approach. My friends were unlikely to have the money to generate substantial AUM fees. So, I tried targeting baby boomers and older clients. But this came with its own challenges. Many prospects had children, and sometimes even grandchildren, who were older than me. Not surprisingly, they rarely saw my age as a positive when deciding who to trust with their life savings.
A key transition for me was when I eventually realized my youth could be turned into a positive. It came as a slow realization, but as I read more about the aging industry it struck me that older advisors retiring created a major opportunity for me and the rest of the younger generation. Then I realized I didn't have to wait necessarily until the older advisors actually started to retire, but instead could position myself to take advantage of the opportunity now.
Investors ages 55 to 60 will likely need a financial planner for 25 to 30 more years to come, so I started asking prospects “how long would you like to work with your financial planner?” The typical answer was: “the rest of my life.” I would then kindly point out they shouldn’t be looking for an advisor their same age who might retire in the next few years — they needed to focus on an advisor who was still going to be around 30 years later. Many baby boomers haven’t thought of it this way before, and this approach created a little gap of opportunity I could use to get a second meeting.
I also focused on planning across the generations. I would spend time with my clients’ children, working with them on their 401(k)s and starting Roth IRAs from scratch. These were things that didn’t generate revenue for me but would let my client know I cared about their families. Also, by developing relationships with the second generation, my clients began to feel I would be a good influence on their children when they eventually did receive an inheritance.
In courting older clients, I also took care in how I spoke. I became more cognizant of how millennials, for example, tend to use “literally” as an adjective instead of “very.” I also worked at eliminating verbal ticks such as “like” and “um.” I wanted to sound less like my client’s grandchildren and more like the professionals they were used to dealing with.
Finally, I became proactive about reaching out to my clients. I routinely scheduled meetings every six months, or even quarterly for my biggest clients. If the market made headlines, I sent personalized updates on my clients’ investments, and I would take them out to lunch to learn about other areas I could assist in.
When starting out, I also made sure I traveled to them, instead of asking them to come to my office. This dropped the cancellation rate by 75%. This also allowed me to see pictures of their children and grandchildren, making it easy to transition into conversations about generational wealth.
Being 30 to 40 years younger than your clients is never easy, but with some thought and phenomenal service, Gen Y advisors can turn their youth into a positive.