What Does The NextGen Client Look Like?
While no two clients will have the same problems, in my 17 years as an advisor I’ve seen some common themes and clients with similar profiles:
• “Justin” entered the workforce late after earning two graduate degrees, and he’s already tried a couple of different careers. He is now well-paid but has fewer years to work. He married later in life and has yet to buy a home.
• “Ashley” achieved impressive career success at a young age, quickly rising through the traditional ranks of corporate banking. But she wants to be on track for financial independence by age 45 so she can run her own business or take a more satisfying job that pays less.
• “Rajiv” is an accomplished entrepreneur. He has paper wealth at eight figures but zero financial planning in place and no nest egg saved for his children’s education or his retirement. He maintains an expensive standard of living but lacks an estate plan and adequate insurance coverage.
• “Hannah” is a talented video producer who earns a good living through freelance work, but she’s not getting benefits such as a 401(k) employer match or subsidized health insurance. She has no budget left for retirement saving after purchasing pricey homes and traveling extensively. She expects to rely on a significant inheritance down the road.
NextGen Clients Are Redefining Retirement
To work effectively with younger clients like these, you must understand their needs.
The kind of retirement planning done by most conventional advisors today is out of date. If you aren’t prepared to move beyond traditional retirement plan templates and discuss things like complex deferred compensation or unorthodox financial goals—or if you aren’t anticipating a younger client’s possible encore career—it’s time to shift focus. These clients have smaller portfolios today but higher income potential ahead, and that can fuel the future growth of advisories like yours.
I’ve worked with many next-generation clients who know they need a financial plan but aren’t sure where to start. Their near-term goals are to pay down student and credit card debt, buy a house or save for their children’s education. But they don’t want a lecture. Instead, they want to partner with somebody who will show them alternatives, complete with data visualization and digital tools they can retrieve anytime and anywhere.
To win this lucrative new business, advisors must showcase their robust service offering.
• For example, you should be able to offer tax planning ideas for business owners or those being paid primarily through stock or other incentive options.
• You should be able to show clients how your firm can insulate them from life’s setbacks, such as divorce, disability or death, by using tools such as risk management, estate planning and smart insurance strategies.
• You should be able to demonstrate to clients how they can use Roth accounts to take advantage of today’s lower tax regimes should rates rise in the future.
• You should be able to give clients confidence about their children’s future college expenses by modeling 529 plans and other education funding approaches.
Retirement is being reinvented by younger people, and they need guidance early on to prepare for what might be lower income from a career change, reduced investment returns and rising taxes. Without your help, they may fall short and have to reverse an early retirement decision.