Beware the dangers of mishandling millennials – it could cost you your business

Elderly couple chatting and laughing with their adult son sitting on the sofa and drinking tea.

By AdviceBridge

If you’re a regular reader of the AdviceBridge blog, you may have read about the “Great Wealth Transfer” last month. 

With £5.5 trillion expected to move from baby boomers to millennials over the next 30 years, it makes sense to start taking positive and proactive steps to ensure that when family wealth changes hands, it doesn’t leave your care.

A brilliant opportunity to boost your business

To harness the true potential of your business, it is first necessary to carefully consider how you can help your clients pass their wealth to the next generation.

With so much wealth at stake, it’s worrying to learn just how few financial services businesses are prepared to deal with the inheritance economy successfully.

Data from Accenture revealed that although 86% of advisers believe they understand the needs of clients’ beneficiaries, in fact only 32% were actually currently working with them.

The same report showed that 18% of advisers had never met with clients’ children, and over half don’t hold meetings with future heirs more than once a year.

No wonder IFAs are already losing a substantial share of assets under management when a client dies.  

The stats show that 15% of practices have admitted to losing more than 50% of the value of assets under management through intergenerational transfers in the last year. 

And 34% reported losing 20% or more.

Key takeaway

Be proactive in engaging with your clients’ family members. 

It’s quite likely that grown-up children may not live close to the senior family members’ home. However, with video calling now becoming a preferred option for many clients, this should help to remove at least the geographical barriers of getting both generations on a call.

Be aware that the things that concern your client may not align with the things that matter most to their children. So, if you’re discussing topics such as succession or Inheritance Tax planning there’s likely to be greater interest from the beneficiary so this should help drive their engagement.

With the cost of living crisis, older independent children could well be struggling financially – particularly in light of the cost of living crisis.

Take the time to understand them and talk to them about how you can help them achieve their goals in a way that suits them.

Tap into what millennials care about

As well as doing more to actively engage younger generations, diversifying your service offerings can also help. 

Provide them with information about things that interest them and fit their lifestyle. 

For example, millennials are more likely than their parents to want to focus on responsible investing. They also wish to explore investments that are both financially worthwhile and have an impact on their social interests, such as the environment or development in third-world countries.

Key takeaway

Millennials have different priorities to those of their parents. So, be sure to acknowledge this and be ready to adapt the conversation and the advice you impart to match their need.

Branching out to offer financial coaching could be a soft way to introduce new and younger clients to your advice firm earlier than you might otherwise have achieved.

And don’t forget to talk about the environmental, social and governance (ESG) element of investment decisions. Help them understand the pitfalls and benefits of responsible investing and let them know that you can help them ensure that the way they invest their money does no harm.

Younger clients prefer to work with younger advisers

According to research carried out by Kings Court Trust, younger clients prefer to work with younger advisers. Yet, 59% of IFAs are over 50 and 75% of advice firms have no active policy to hire younger people to the team. 

This figure rises to 88% in smaller firms with less than £10 million assets under management.

The image below shows a breakdown of IFA firms comparing baby boomer clients and the age of their IFAs.

Key takeaway

To avoid falling foul of such a basic ask, review your hiring policy, and start actively looking to attract younger advisers into your practice.

Read more: 4 ways to win younger clients

Introduce a digital service offering

From making personal decisions to getting planning help from an adviser, technology influences the way millennials invest.

Four years ago, MoneyMarketing reported that “advisers need to start building a hybrid model that embraces digital tools now before the next generation takes over the client relationship, otherwise they are unlikely to want to use the service.”

When it comes to financial advice, the human touch remains important for building trust and relationships. But, with so much information available on the internet and through social platforms, many millennials are likely to connect with financial advice online before they engage with a human adviser.

Key takeaway

To respond to different demands from millennial beneficiaries, look at ways you could improve your service through a digital offering. Be ready to solve their problems and give them control over their finances with technology.

Read more: Want to win? Statistics and trends prove financial services companies must provide digital solutions

The AdviceBridge platform helps deliver personalised financial advice to clients of every age in an efficient and cost-effective way. This is particularly useful when it comes to less profitable and harder to service clients, such as millennials.

The white-label app gathers personal and financial information direct from the client and digitises many of the manual, time-consuming processes, allowing you to focus on the relationship instead of admin, research, or reports.

It also calculates the income your client will receive on a monthly basis in retirement, alongside a “safe to spend” figure of what they can spend on a monthly basis currently, while showing the best way to invest across different tax wrappers.

Above all, the app enables you to communicate and engage with clients from all walks of life, no matter where they are, specifically those who traditionally prove unprofitable due to the accumulating phase of their financial planning journey.

Get in touch

To find out how AdviceBridge can benefit your business and help you service more clients profitably, please get in touch. Email hello@advicebridge.combook a demo, or call us on 020 3925 3850.