“Don’t let money run your life, let money help you run your life better.”
–John Rampton, CEO of Due
Like lots of other industries, the financial services community is transitioning as boomer markets mature, and younger generations—both Gen Xers and millennials—evolve.
Don’t get me wrong—boomers are still an important part of any financial practice and probably represent the majority of your business. However, you’re making a mistake if you don’t pay attention to Gen X and millennial clients and potential clients. It’s easy to become complacent and rely on what’s comfortable—boomers who are already heavily invested. However, that’s not where the future is, and the sooner you start paying attention, the better.
When I spoke at the XY Planning conference earlier this year, I talked about the importance of reaching out to this audience by developing a ROL (Return on Life™) practice. My message? Let’s help this profession be what it was meant to be: a group of people who enrich lives by offering wisdom. The response was overwhelming.
What I’ve discovered about younger investors, specifically millennials, is that they have many of the same goals as boomers. According to a survey conducted by the CFA Institute and Finra Investor Education, “Uncertain Futures: 7 Myths about Millennials and Investing,” most of what we hear about this group when it comes to investing just isn’t true:
- Millennials have unrealistic financial goals. In fact, when it comes to the future, they want to retire at 65 and live comfortably.
- Millennials are overconfident. When it comes to investing, at least less than half are confident that they are on the right track.
- Millennials don’t care about working with an advisor. In fact, only 15 percent who were not working with an advisor cited lack of trust as a reason. For most, it was simply because they didn’t have the financial resources yet (or at least thought they didn’t).
- The majority of millennials prefer robo-investing. I admit, this one took me a bit by surprise—millennials prefer to work face-to-face with their advisor.
Technology is important to this group, but as you can see, so is personal interaction. They want to know who they’re dealing with.
In a survey of 10,000 millennials and Gen Z men and women, this finding stood out: “While technical skills are always necessary, respondents are especially interested in building interpersonal skills, confidence and ethical behavior—all of which they consider essential for a business to be successful.” They know what they don’t know—and what they want.
The same survey states that, “Younger workers are increasingly uneasy about the future, pessimistic about the prospects for political and social progress, and harbor growing concerns about safety, social equality, and environmental sustainability.” Doesn’t this sound like boomers when they were younger (and for many, these traits still define them)? Turns out different generations may be more similar than they think. Even though the survey referenced is focused on businesses and what they can do to win back millennials as employees, it clearly illustrates that just as millennials are essential to the future of business, they are essential to the future of financial planning.
So, what can we do?
The entire premise of moving your practice from one that is ROI-focused to one that is based on ROL principles really applies to all demographic groups—Gen X, millennials, and boomers. Think about it: developing financial plans that help someone live the best life possible with the money they have is really every age group’s goal. This approach means you’ll be under less pressure because you will no longer have to have a separate approach, depending on whether you’re working with a millennial or a boomer. Talk about win-win.
You no longer need to try to be something—or someone—you’re not. Instead, your business is driven by your wisdom, your experience, your insights. Your role is to help clients find the balance between vocation and vacation, and to ensure that they prepare so they don’t have to repair. If you do this, you’ll end up with more referrals than you’ll ever need.
ROL-centered practices achieve success by focusing on these six core competencies:
- Organization: Helping your clients organize all of the different parts of their financial lives—with or without technology.
- Accountability: Holding your clients responsible for their goals and plans.ROL-focused practices help clients prioritize goals from most critical to least.
- Objectivity: ROL-focused advisors help clients avoid making emotionally-driven decisions by providing a different perspective. Your objective is to help clients make informed decisions, even when emotions such as greed or fear are driving them.
- Proactivity: ROL-focused advisors encourage clients to reach out to them, and make sure they are on track with goals, help anticipate life transitions, and help plan for the unplanned. Being proactive is what separates the average advisor from the extraordinary advisor.
- Education: ROL-focused advisors take the time to educate clients about decisions they face rather than just providing an answer that may or may not be appropriate.
- Partnership: ROL-focused advisors collaborate with their clients. As someone who is likely to be one of the most influential people in their lives, the best financial advisors have long-term relationships with their clients.That means you and your client need to be comfortable with each other—if you’re not (or they’re not), you shouldn’t be working together.
If you want to continue to serve your boomer clients and grow your base of Gen Xers and millennials, focus on their needs—every demographic wants to reap the rewards of your wisdom.