Not Just Asset Accumulation
It’s true, Hanson says, that next-gen clients are usually in the “asset-accumulation and family-building phase” of life. But they are also focused on maintaining a steady cash flow and savings rate, negotiating a good salary with company benefits, buying a first home and other priorities.

“Life changes very quickly [for next-gen clients] and often all at once,” says Kevin Brady, a financial planner at Wealthspire Advisors in New York City. “Career path conversations quickly become first-home conversations, followed by raising a family and thinking about funding college for their kids.”

Brady is a millennial, too. He says advisors shouldn’t make the mistake of thinking people under 40 are flighty, even job-hoppers. “We started our careers at a time when transparency was valued, information spread very quickly, and economic conditions were challenging,” Brady explains. Many jobs that attract next-gen candidates are short-term in nature. “A project manager or software engineer in tech is going to switch employers more than someone in accounting,” he says.

Willing To Pay For Value
Another myth is that younger clients aren’t willing to pay for good advice. Michael Durso, the CEO and CIO of ShoreHaven Wealth Partners in Red Bank, N.J., says his younger clients have no problem paying for financial planning, market advice, tax mitigating strategies or other value-added recommendations. But, he warns, “No one wants to pay solely for an asset allocation.”

Unlike their parents, next-gen clients don’t want to delegate their financial decisions. They see an advisor as a partner, a trusted teacher or perhaps a life/behavior coach.

Douglas Boneparth, the president of Bone Fide Wealth in New York City, says, “If you are going to be salesy or sound too much like you’re pitching something, it can be a turnoff.”

Not Naïve
Next-gen clients aren’t naïve either. They know it’s not easy to build wealth. Many came of age during the bursting of the dot-com bubble; the 9-11 attacks; hurricanes Katrina, Rita, Maria and Sandy; a housing collapse that caused many people to lose their homes; and the financial crisis of 2008, or the Great Recession.

“These folks have gone through a lot,” said Cammie Doder, chief marketing officer and a partner at Aspiriant in Los Angeles, during an online discussion with Financial Advisor magazine Editor-in-Chief Evan Simonoff. Consequently, she said, they are big believers in diversification. “They even diversify their revenue stream,” she added. “That’s why we hear so much about the gig economy and people having multiple jobs. It’s not so much about lifestyle as diversification.”

Next-gen clients are “averse to risk,” confirms George at Johnson Financial. Their long investment horizon gives them leeway to have a fairly aggressive portfolio, but “a large share would choose capital preservation over outperformance as an investment objective,” he says.

They also “understand history and appreciate that we can relate certain environments to previous environments,” says Andrew Hambleton, a financial life advisor at Telemus Capital in Chicago, referring primarily to market cyclicality.

Not Spendthrift
Furthermore, next-gen folks are not spendthrift. They are “better savers than their parents, starting earlier in life and putting aside an average of 19% of their earnings,” says Kimberly Foss, founder and president of Empyrion Wealth Management in Roseville, Calif., citing a May 2022 survey by Natixis Investment Managers.

Their financial sophistication can be impressive, too. “You would be surprised how many younger clients understand dollar cost averaging and buying the dip,” ShoreHaven’s Durso says.

Nevertheless, many need help “building the skills that allow them to command a higher wage and have a greater capacity to save, invest and ultimately positively influence the people and causes that are most important to them,” XML’s Congdon says.

A New Business Model
Yet to attract and retain younger clients, firms ought to consider a new business model. “By only looking for clients with a specific amount of AUM, we are missing the opportunity to serve an entire generation,” Morton Wealth’s McKinnon says.

One suggestion is that advisors should consider a subscription fee schedule. “Create a model based on an annual fee, monthly fee or percentage of income,” says Billy Spencer, a wealth planner at Crestwood Advisors in Boston.

Some advisors go so far as to offer an hourly or per-project rate, he says. It’s partly a matter of changing your mindset about the value you bring to the table, McKinnon says. “We have to stop thinking of it as dollar for dollar. And while we generally do help clients grow their net worth, we also help them live better and more fulfilled lives,” she says.