Every generation has unique traits that define them; these traits can run from the complex, common experiences, attitudes and beliefs, to the simplistic, fashion and music. If Boomer advisors are to successfully communicate financial advice with this younger generation these generational differences and their influences must be understood.
The mathematics of financial planning does not change, regardless of generational differences. If you want to buy something in the future, you have to save for it today. The key for the advisor is to communicate actions around finances in such a way that the individuals move from theory to implementation. Let’s start by examining the largest hurdle any Baby Boomer advisor will face.
“You’re our parent’s age.” Gen X and Gen Y clients have parents, and if they wanted to be lectured to, they could do that for free by simply calling their parents. Gen X and Gen Y clients will not stay clients if they feel they have just paid for a lecture by their parents. Prove to your Gen X and Gen Y clients that you understand them, their unique needs and that you have solutions tailored for them, not simply modifying what you use for Boomer clients to fit them. They do not want their parent’s financial plan.
The Boomer advisors are best served by understanding their young client’s problems and have solutions. State that from the outset of the engagement, Gen X and Y clients want to know you’re there to help them, and that this is not simply a favor to a wealthier client. How do the Gen X and Y clients differ from their parents?
- Student loan debt, credit card debt, poor credit score, or building a budget. Any one of these items may be the driving force behind what have brought them to seek financial advice. Once again, this is not lecture time, rather solution time. Don’t make them feel bad about where they are, have a set of tools and procedure that can help them get what they need
- Retirement, job hopping and “free agent” status. This is the generation that grow up watching our parents lose their jobs and where coming from the divorced home is more common than not. Unlike our parents, we do not believe that Social Security will be there for us, and the notion of a pension or employer loyalty is the stuff of a bygone era. Help your young clients by the ability to evaluate 401(k) investment choices, and how to holistically use the IRA to offset investment gaps in the 401K. Lastly, be comfortable with the 401(k) rollover process, the younger generation will have more employers than their parents and his generation wants an advisor who knows how to handle job transitions
- Complex solutions seem far away. While it is a comfort that can assist with estate planning and complex tax issues, for the most part, the Gen X and Y generation is not in need of these items yet. They want to know that you can help them get out of debt, buy a home some day and help them with retirement, while understanding that retirement seems so far away. Make sure your plans mention estates and tax, so it does not appear to be forgotten, but also that their action items focus on what they need most.
- Information Generation and the perception of time. The younger generation invented Google and grew up with texting, e-mail, and the internet. Most of them a Blackberry-like device. Make sure you ask them what is the best way to communicate, and do not be surprised when the answer is e-mail. Communicate your procedures for returning e-mails. And how you use e-mail to keep clients updated through the creation and implementation of their financial plans
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F. John Deyeso, CFP®, CFA is principal of Financial Filososophy, a financial planning firm based in New York, NY. To learn more about John and his practice, visit him online at www.financialfilosophy.com.
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