Financial services is facing a renaissance, and it isn’t just within the firms or the regulatory bodies that govern them where we can find change. One of the most vital shifts occurring is in the customer base itself and understanding who the clients of the future will be, how they choose their financial advisors, and what drives their major financial decisions will prove to be a necessary strategic component of any successful firm. The evolution of the customer to what many have coined to be “Next Generation” clients requires not so subtle advisor adjustments in thinking, portfolio planning, and client relationship management in order to successfully secure and retain this lucrative client segment.
Understanding who the Next Generation client is demographically sets the stage for optimally servicing these accounts and creating an organic and sustainable client relationship. Next Generation clients are those who are in their 20s and 30s today. You’ll find that unlike Baby Boomers, Next Generation clients statistically have delayed both marriage and raising a family. Spending more time workforce focused has enabled Next Generation clients to have significant capital at the ready to invest at an earlier stage of life than seen historically in other demographic sectors. Interestingly, while the family goals of the Next Generation clients are tracking at an extended timeline, once married and raising a family, many Next Generation clients follow an accelerated timeline as it relates to their investment strategy.
A recent Financial Planning article cited an example illustrating that a Next Generation client’s lifestyle evolves from carefree partying in their late 20s to nighttime baby feedings in their late 30s. This indicates a remarkably short 10-year shift in life goals and ultimately financial goals for the Next Generation client.
What all this means for a financial services professional servicing this market sector is that both the advisor and the firm should be as nimble and chameleon-like when it comes to change as the clients themselves. This can start with the firm culture which should be comprised of a mix of seasoned and young advisors and have the ability to offer a range of investment products to achieve results. You will find Next Generation clients cite 401K plan management as a high priority in their personal financial goals. Also, Next Generation clients will have used social media and the Internet to their advantage and will have done their due diligence and be fully aware of a firm’s product and service capabilities, as well as the success rates of the firm’s advisors. Lastly, Next Generation clients will expect their financial services firm to be as technologically savvy as they are through the availability of cutting-edge financial technology tools that enable both better portfolio management and better client relationship management.
Most importantly, when seeking out the business of a Next Generation customer, understand that these clients do not make buying decisions on relationship loyalty but on success and results. They have been raised in a fast-paced world based on instant access to information and the same type of access will be not just expected, but required of their financial advisor. Understanding this and fostering a relationship based on meeting the Next Generation client where they are at – not where your firm has been – will be the key to success long-term in maintaining the Next Generation client revenue stream.
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