In my previous installment, I noted that hiring Millennial advisors is a smart way to attract younger clients. The research, such as that conducted by Sophia Bera, founder of Gen Y Planning, supports this notion. Sophia has collected data from her clients that indicates 90% of Millennial clients want an advisor who is within 10 years of their own age.
Given this information, it seems that the eventual future of the financial industry lies entirely in the hands of Millennials.
What the Industry Looks Like…
Despite the seeming need for younger financial advisors, recent research from TD Ameritrade & Investment News Research indicates that only 21% of financial advisors are under the age of 40.
Additionally, this year roughly 22% of advisors anticipate hiring a NextGen advisor – though not all of these individuals may actually carry through with this hire.
If you want to expand your client base into new demographics, it is important to take on advisors who are similar in age to those clients. This connection facilitates the development of rapport, as the advisor can not only understand the economical context of major life changes, but can also more easily relate to these life changes that the client is going through.
As a result, the seeming deficit of Millennial hires is not in your best interest.
How Can Millennials Help?
Beyond the potential to attract new Millennial clients, NextGen employees are a critical agent in forming relationships with the children of your existing clients. Thanks to the relationship you have with their parents, you have an opening to connect with these individuals.
At this point, assign your young talent to manage these relationships. Again, ability to relate to their concerns is key. Moreover, the NextGen talent will better understand the social media/technology trends that can be used to leverage other affluent Millennials.
How are NextGens helping?
The TD Ameritrade & Investment News Research study indicates that firms that have already hired NextGens saw their assets increase by an average of 20% annually.
Comparing the firms without NextGens and with those with least one such advisor, on average, those “NextGen” firms have a 20% increase in Income per Owner.
Thus, these firms are clearly positioned to grow at a faster rate in the long-term.
So, here’s the big question: Is yours?