The future of your practice depends on attracting and retaining younger clients. And right now, younger clients are actively seeking your advice, as the COVID-19 pandemic hits them from all sides—triggering worries about health and safety, fears for loved ones and concerns about financial security.

In fact, nearly half of Americans ages 18–34 (45%) are relying on an advisor more than ever—and nearly four in 10 (39%) have engaged an advisor for the very first time—according to a recent Nationwide Retirement Institute survey of American adults aged 18 or older, including investors with investable assets of $100,000 or more.

Twice In A Lifetime
Younger clients have already faced their share of financial challenges. Coming of age during the Crash of 2008 and the Great Recession made them wary of market risk. Outsized levels of student loan debt caused many to put important life decisions on hold—from buying a first home to starting a family—as they worked to build a solid financial foundation.

Now, as the pandemic has put their job security in jeopardy with the highest levels of unemployment since the Great Depression, and their portfolios are pummeled by a toxic mix of recession, volatility and looming bear market, younger clients are steeped in their second “once in a lifetime” black swan event. The struggle is real, and so are their fears.

Blindsided By The Pandemic
Americans ages 18–34 feel a lack of control and an urgent need for more guidance. Nearly three-fourths (74%) said that even if they do all the right things to manage their finances and investments, they can still be blindsided by outside events like the pandemic. As a result, more than two-thirds (67%) said they need help managing their finances and investments to succeed in the future. Only 10% said they do not expect COVID-19 to impact their ability to meet their financial obligations. The vast majority need your advice.

Younger Americans fear the pandemic’s near-term impact. Americans ages 18–34 are more likely than all American adults to say their top COVID concerns include being unable to pay bills or meet financial needs (54% vs 45%) and losing their employment (44% vs 30%). Both are equally concerned about losing their life savings (both 33%). Younger Americans are slightly more concerned about being unable to afford health care (29% vs 27%), and only slightly less concerned about being unable to retire as planned (20% vs 21%).

At Risk Of Locking In Losses
Under the pressure of the pandemic, younger clients are not always prepared to make the best choices. When COVID-19 impacts their ability to meet their financial obligations, Americans 18–34 are more likely than all American adults to take “unfavorable” actions, such as to delay paying their bills (32% vs 24%), increase credit card debt (23% vs 18%) and stop paying bills (15% vs 10%). They are also more likely to fill a budget shortfall by taking a loan against their qualified retirement plans (15% vs 11%) and their non-qualified investments (10% vs 7%). Worse yet, they are more likely to risk locking-in long-term losses by selling shares in their qualified retirement plans (13% vs 10%) to meet current financial obligations.

The COVID Crisis also impacts their investing approach. Younger Americans are more likely than all American adults to decrease contributions to their qualified retirement savings plans (15% vs 10%) and far less likely than all adults to stay the course (25% vs 42%). When it comes to their non-qualified investments, such as stocks, mutual funds and ETFs, they are also more likely than all adults to take money out of the stock market (15% vs 10%) and less likely than all adults to stay the course (21% vs 35%). What they need is your expertise to develop a long-term holistic strategy—and your help to stick with it.

Prioritizing Protection
While portfolios have bounced back from record declines, ongoing volatility remains a top concern. But there is a silver lining. Younger Americans are prioritizing financial protection. In fact, they are more likely than Americans overall to recognize the need for annuities to protect assets against market risk (58% vs 47%) and to protect their retirement income (61% vs 48%).

And while younger clients struggle to meet their own financial needs, caring for others is also among their top concerns. Americans 18–34 are far more likely than all American adults to recognize the need for life insurance (70% vs 57%) and more likely to recognize the need for long-term care insurance to protect themselves and the people they care about (63% vs 56%). They are also more likely to be worried the pandemic will impact their ability to fulfill potential caregiving responsibilities for others due to financial strain (58% vs 44%) or due to their own illness caused by COVID-19 (52% vs 42%).

Trust Must Come First
When it comes to nurturing client relationships, trust comes first. While advisors top the list of trusted sources for all American adults during the pandemic, younger Americans said family and friends are number-one. So, what can you do to gain their trust?

Our Nationwide Retirement Institute has completed another soon to be published study revealing more effective ways to build and maintain strong relationships with clients. We looked at two types of trust—cognitive trust and affective trust—to determine which is more likely to drive a client to work with an advisor in the future. Factors like product performance and service experience drive cognitive trust, or “trust from the head.” Factors like empathy and perceived similarity drive affective trust, which comes from an emotional connection.

Our research shows that affective trust is a far greater predictor than cognitive trust, and the most significant driver of affective trust is empathy. These results are consistent across gender and a wide range of age and asset levels, making it clear that empathy—alongside your expertise—is essential in your everyday practice. Building affective trust is more important than ever, as your younger clients’ lives have been upended by the pandemic. It remains crucial in the months ahead, as the economy begins to re-open, exposing them to new challenges and new fears.

Protect Your Clients And Your Practice
While they may be struggling right now and challenged by the pandemic for months to come, younger Americans have tremendous potential to earn more wealth and inherit their share of the $30 trillion Great Wealth Transfer. They are better educated than any generation before them. They are skilled at leading new innovations and launching new trends. Adapting to change has been a part of their entire lives—from the latest streaming service to the shiniest handheld devices, from the Crash of 2008 to the pandemic’s “New Normal.” Younger clients’ financial futures depend on you—and the future of your practice depends on them. Help them solve their COVID concerns now, and your firm can secure a client for life.

Craig Hawley is head of Nationwide’s annuity distribution.