If advisors want to work with next-generation clients, they need to adopt a new business model. But at the same time, they must also dispense with certain stereotypes about what younger clients want and need.
These were among the conclusions of a discussion between Cammie Doder, chief marketing officer and partner at Aspiriant in Los Angeles, and Stacey McKinnon, chief operating officer, chief marketing officer and wealth advisor at Morton Wealth in Calabasas, Calif., in a virtual “fireside chat” titled “NextGen Clients—Myths And Realities,” hosted by Evan Simonoff, editor-in-chief of Financial Advisor magazine, which sponsored the event.
Myth #1: NexGen Clients Don’t Have Assets
NexGen clients are “the future of everybody’s business,” Simonoff began. But one of the primary myths about millennials and younger folks is that they don’t have much in assets and are difficult to serve.
McKinnon said younger people may not have amassed great wealth, but they do have some assets. Typically, however, it’s not in stocks and bonds. Instead, it may be in real estate, cryptocurrency or stock options. Often, that makes their portfolios more complex than those of other folks. But what they lack in accumulated assets, they more than make up for in income. “They will quickly become wealthy,” she said. “Are we going to wait for that? Are we going to create a model that can serve them now?”
Myth #2: NexGen Clients Don’t Care About Investing
Doder responded to a question about whether younger clients really care about investing. “They’re not gamblers, this next generation,” she said. But she acknowledged that they are interested in a wide range of topics and opportunities. “It’s our job as advisors to help educate them, to help them think about all the different investment opportunities,” she said.
Young people are socially conscious, she continued. They are interested in environmental, social and corporate governance (ESG) investing. But that doesn’t mean they are narrow-minded. “The next generation is very passionate about aligning with their values,” she said. “That includes where they work, what they do and their investment portfolios. It’s really important to them.” But there is plenty of room for advisors to help them find investment opportunities that are aligned with their core values.
Myth #3: NexGen Clients Prefer Robo-Advisors
From there the conversation shifted to technology. Simonoff asked if NexGen clients really prefer robo-advisors.