Millennials—also known as Gen Y—will soon outnumber baby boomers, becoming the largest adult segment in the nation. As Gen Y grows, so does their wealth.
Seventy-one million Americans aged 22 to 37 are now entering their prime earning years. These young adults are making important financial decisions, like buying a first home, investing in a 401(k) and paying off student loans. Many millennials are also set to inherit sizable sums from aging parents, further accumulating wealth.
It’s clear young investors need help protecting their financial futures. But despite their monetary mindedness, many millennials aren’t working with financial professionals, according to a Deloitte study. The industry has also traditionally focused on older clients with more wealth.
Given the growth of Gen Y, many financial professionals want to know how to attract more millennial clients. Tapping into this underserved market requires an understanding of young investors’ unique financial beliefs, habits and priorities and the ability to offer flexibility, personalization and transparency.
What millennials want from financial professionals
According to a report issued in 2018 by the FINRA Foundation and CFA Institute, about 44% describe their overall risk tolerance as “risk averse” or “unsure.”
Living through financial crises may have made millennials better with money but they’re still cautious with their funds. But according to the FINRA and CFA research, the primary hurdles for non-investing millennials are debt, income levels, and lack of knowledge.
As digital natives, millennials are comfortable with online businesses. In fact, one survey by Global X Funds found that 93% of Gen Y adults say they would choose a financial professional with strong technological capability.
4 ways to earn business from Gen Y clients
These tips can help you appeal to younger investors and partner with them to manage their wealth for years to come.Offer socially responsible investment options
Many young adults are idealists who dream of changing the world and making an impact. As a result, they want their investments to reflect personal values. Offering socially conscious products is one area where financial professionals can provide customization and gain an advantage over robo-advisors.Deliver high-touch services
Stand out from the competition by providing impeccable customer service. Be present on social media and make it easy to schedule appointments online. Consider offering video conferencing sessions to give your younger clientele more hands-on support even if you can’t meet in-person.
Promote transparency and build trust
Building trust is a must. Be upfront about your fee structure. Pricing transparency can help overcome negative attitudes a new inexperienced client may have toward financial professionals. Young investors want assurance that they’re hiring a partner who can help improve their financial future, not a salesperson who is out for a commission. Since few Gen Y investors meet the minimums many traditional financial professionals may seek, charging on an hourly or per project basis affords greater flexibility and can also help you attract younger clients.
Pitch the long-term relationship
Convey to potential clients that picking the right financial professional in their 20s or 30s can impact their long-term wealth. Ask questions to understand the future they see for themselves 10 or 20 years ahead. Work together to create a plan that anticipates future life changes, such as buying a home, saving for kids’ college funds or retiring early.The bottom line
As millennials mature, they need the services of financial professionals. Courting this clientele may come with challenges, but the opportunity to reach this under-served market can be well worth the investment.
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