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.
The Business Case For NextGen Clients
It should be obvious that this pool of younger clients offers vast opportunities for advisors. If you get to these prospects early, help shape their habits and address their questions and fears at the onset, a long and fruitful relationship can lie ahead.
One common fear I have run into is that these clients have lots of planning needs and high expectations, but not a lot of money to pay advisors. I suggest overcoming this by improving the intersection of expert advice and technology you offer, in a way that helps you attract and scale more NextGen business. For example, young professionals are very comfortable with conducting business digitally, which speeds up information-gathering. But you should always maintain a personal touch with phone calls and in-person meetings, too, to deepen the relationships.
If I have learned anything in recent years as my firm has grown, it’s that I can’t do everything, and automation helps. Artificial intelligence (AI), for example, can help an advisor achieve a scalable, comprehensive financial planning process. It’s no longer necessary to depend on a jumble of spreadsheets, checklists and Google to find planning opportunities in disciplines beyond plain-vanilla retirement advice.
To further this process, in early 2020 I launched FP Alpha, an AI-driven, comprehensive wealth management platform that complements today’s retirement software. It’s now helping advisors expand their offerings and demonstrate a value besides investment expertise to more clients, including discerning millennials. It allows advisors to appeal to younger clients by offering an efficient, digital experience that generates holistic recommendations drawn from clients’ financial documents (like wills, tax returns and insurance policies). And it’s powered by advice from 40 subject-matter experts representing more than 15 planning disciplines.
Clearly, this type of comprehensive planning will be what clients demand in the future, especially next-generation consumers who want to understand all the ways advisors can help them—in a broad scope of areas from tax and student loan debt management to health and life insurance review.
Advisors will have more opportunities to create trust by offering custom guidance to solve the problems young professionals know they have—and those problems they don’t yet know about. These clients will need the same “grown-up” advice that your most established high-net-worth clients get, not entry-level planning, regardless of their ability to pay at this stage. To make this possible, and to guarantee a meaningful role for financial planners for generations to come, we must follow younger clients’ lead and embrace technology to automate, scale and standardize the experience for all.
Andrew Altfest is the president of Altfest Personal Wealth Management and the CEO and founder of FP Alpha.