It is going to be the biggest generational wealth transfer in history.

Millennials are set to inherit $30 trillion from their baby boomer parents in the coming years. To succeed in working with this younger generation, advisors will have to transform how they interact with clients.

Investors are consumers first, and looking at their investment strategies as a personal engagement opportunity is key to maintaining assets. An essential way to bring an advisor directly into the next-generation client’s life is to focus on how they perform against personal life goals.
Historically, advisors have kept life goal planning and performance reporting separate.

Advisors would set goals and targets during the financial planning process, using Monte Carlo simulations and other algorithms to determine how various options might withstand market stress and timeframes. Then, advisers would meet clients — typically quarterly or annually — to review investment performance.

Goals-based planning and performance management have historically been separate, and at times, static interactions.Clients now want two things: 1) a personalized experience where advice relates to their actual goals, for example, saving for retirement or saving for kids’ college tuition; and 2) real-time status updates to track their progress toward those goals rather than old-fashioned quarterly updates.

The shift in what clients want from advisors comes as millennials expect a more digital experience and a higher level of personalized interaction, regardless of investment vehicle. As such, advisors should take three steps to bring together the financial planning practice and life-goals infused performance reporting:

1. Set goals: Advisors should make discussions about life goals a primary focus of their business, using the help of a third-party financial planning service if needed. Those detailed goals should include an assessment of whether everything else in the client’s financial life is working toward those goals, from having the right insurance to the best mortgage. Advisors should leverage insights from social-media postings — such as pictures of a new baby or congratulations about a new job — as well as analytics from artificial intelligence engines to know when to connect with clients.

2. Connect with the next generation: Advisors should hold discussions with the children of wealthy clients about their life goals because two-thirds of children fire their parents' advisor after inheriting their wealth. At the same time, advisors must push employers to offer a collaborative, digital service that will appeal to that younger generation.

3. Track goals and interact with clients in real time: Real-time performance data should show personalized progress against actual life goals, not just against financial market benchmarks. Clients are also engaging in peer-to-peer benchmarking akin to social-media models. These clients view performance against their peers as an added proof-point of success. Advisors can leverage digital channels to annotate electronically delivered performance reports for clients with personalized thoughts and suggestions. By embracing technology for added client contact and personalization, the printed quarterly reports should become almost redundant. Clients can embrace their technology-driven consumer behaviors and view digital engagement as a value-added extension of the financial advisory relationship.

With many wealth management firms already incorporating new technologies such as robo advisors into their broader offerings, financial planners have a growing arsenal of tools to keep clients happy. Most firms are starting to adapt, with 50% of wealth management firms evaluating changes to their advice and guidance strategies to better address client life goals, according to a poll of wealth management executives conducted by Broadridge and CEB.

Communicating with clients about their life goals and managing those expectations will be crucial to how advisors build relationships and deliver a personalized wealth management experience that appeals to the next generation of investors. Those not yet on board should take action.

This story is part of a 30-30 series on savvy ideas on modernizing your practice. This story was originally published on June 5.

Traci Mabrey

Traci Mabrey

Traci Mabrey is head of Wealth Solutions at Broadridge.