Adviser Tactics: How to recruit millennial clients

As millennials enter their prime earning years, savvy advisers will be increasingly looking for ways to communicate and engage with them. But if advisers are to secure the business of this cohort, they will need to be clued up on how the sector is developing, what it is millennial clients actually want, and understand the best ways of reaching them.

After reading this article you will have a better understanding of millennial investment priorities, their expectations when it comes to advice, and how to target potential clients.  

30 minutes of CPD include:

• article: 20 minutes
• related learning: 5 minutes
• quiz: 5 minutes

While it is generally accepted that millennials, like their predecessors, primarily seek out financial advice for the basics – mortgages, protection, taxes and retirement planning – this group of individuals demand a different approach to previous generations.

Greater personalisation, flexibility, and integrated digital services are just a few key components this group of clients expect from their advice providers.

Not so different

Although financial markets have performed strongly over the past 22 years, millennials have lived through 9/11, the 2008 global financial crash and a worldwide pandemic, all of which brought volatility and are likely to have impacted their financial planning priorities.

US research conducted earlier this year by Nationwide revealed that while millennial financial optimism had declined 24 percentage points, to 38% in 2020 from 62% in 2019, it was clear that this group of individuals had absorbed the lessons of the pandemic and were channelling them into their financial planning practices*.

In fact, 81% of millennials had a strategy in place to protect against outliving their savings in 2020, 71% had a plan in place to mitigate risk, and 75% of millennial respondents said they had a financial adviser in 2020*.

Millennial priorities are not so different from those of their predecessors, then. They primarily aim to plan for the future and protect themselves against unexpected risk.

This group, like most clients, value open communication and informed expertise. They want, and need, to be aware of the potential risks as well as returns associated with managing finances.

“When recruiting younger investors, it’s still important to get across some of the basic financial planning messages, such as retirement planning, getting on the property ladder or regular saving tips,” says Finn Houlihan, managing director at Arlo Group.

While previous generations usually had their first taste of financial advice through a retail high street bank, this is generally no longer an option for millennials as branches closed and banking moved online, taking their manager-led approach with it.

Yet, the basic financial planning needs of this population group are still there.

“We have a responsibility as financial advisers to get the same message across to them about the importance of financial planning,” says Finn.

Not about a lump sum

These individuals are less concerned with lump sum investment, however, than perhaps some of their wealthier predecessors. With increased longevity and (relatively) generous defined benefit pensions still in play for their parents – and even grandparents – many are going to have to wait to inherit.

Therefore, traditional products and goals, such as accumulation, protection, and mortgages, are still the main areas for which millennial clients seek out the guidance of an adviser.

To engage millennials, advisers need to look at their circumstances today. Many have high incomes, yet the model for many advisers is to manage wealth, not their regular paycheques.

Related learning: Millennial research habits in 2021 [2-minute read]

The majority of millennials are unlikely to be looking to invest substantially unless they have inherited or are successful entrepreneurs.

Therefore, to attract millennial customers, advisers need to switch their modus operandi to suit these high income, low asset customers.

Some advisers believe this cohort’s potential lack of assets could present challenges for customer acquisition – and one of the biggest could be helping them to understand the value of financial advice at all.

Without the asset piles to invest, they may not feel the need to seek advice, yet they will have other needs.

“They are likely to have financial goals such as purchasing a first home, supporting a young family or starting to plan for retirement, and having a financial adviser there to support you through such stages in your life can be invaluable,” says Rosie Hooper, financial planner at Quilter.

According to Tim Fassam, director of government policy and relations at the advice sector’s trade body, PIMFA, this group has very holistic needs.

“They won’t just be looking to invest their pension assets,” he says. “They are going to have to manage competing interests, like the cost of children, but their core need is exactly the same as everybody else’s: they need to know what the best thing to do is in their circumstances.”

Related learning: The biggest ethical concerns for millennial investors [3-minute read]

Timelines

What mostly differentiates millennial clients is the timeline they are on — and timing is important.

Advisers should be seeking to engage millennial clients at opportune moments, such as when they take out a mortgage or look at other loan options. Securing trust at this level may lead to winning their business over the long-term.

“Millennials are generally in a vulnerable stage of the financial lifecycle where they haven’t yet accumulated assets but may have taken on significant debt such as a long-term mortgage liability,” says Josh Castle, financial planner at Progeny. “Being on hand for them at this point enables advisers to potentially capture and support these clients over a lifetime.”

As well as ensuring they have suitable protection in place, an adviser can become an important part of their journey to wealth creation and financial resilience into later life.

Millennial clients are far more likely to seek the services of an adviser for immediate financial needs. Later life planning often takes a back seat at least initially, and advisers should be focusing on how they can help millennials facilitate their near-term goals, such as first-time mortgages.

“While it is still important for later life planning to be considered, younger clients are far more likely to prioritise goals such as getting on the property ladder or being financially secure ahead of starting a family,” says Rosie at Quilter.

Expectations: Personalisation

One of the things millennials, and increasingly all age groups, expect is for advisers to tailor their services and adopt a flexible, individualised approach to their needs.

Increasingly clients expect services to fit around them.

Clients do not want to be told they must book and commit to a face-to-face meeting with an adviser between 9am and 5pm, Monday to Friday. They want to select what they see as an appropriate channel and speak to an adviser who can fit around their busy schedule.

“They are unlikely to work with any firm that puts up significant barriers to that,” says Tim
As highly digital, personalised advice becomes common place, advisers will also need to juggle the demands of the regulator with that of the client, particularly around issues such as identity and verification (ID&V).

There will likely be challenges around some of the regulatory requirements versus what customers expect, which is increasingly for transactions to take place instantly and at a time that suits them.

“Younger people are likely to be less tolerant of bureaucracy, and the regulator is rather fond of it,” says Tim.

Another crucial aspect of personalisation is making make oneself accessible.

Millennials want to know who advisers are and what makes them tick. They want to know why they do what they do and what they can bring to the table.

And they want to know why they are so interested in their money.

“We are ultimately problem solvers and confidants, the people with the tools to help clients achieve their financial goals, and often the contacts to help them along the way with their life goals,” says Daniel Williams, financial adviser at Morgan Williams.

Digital

Integrated technology is certainly expected by this group, which is the path increasingly followed by all clients.

A recent study carried out by adviser-focused investment management platform Vise revealed that 3,000 adults (across all ages) trusted financial advisers more than any other resource for managing money, including robo-advisers**.

Nevertheless, high-level integration is accepted as standard by this group of digital natives. They recognise the value of advice, but it just needs to be tailored to their personal preferences in terms of delivery.

“Advisers who can provide a range of services with low friction administration, alongside personalised digital engagement, will be best placed to target millennial clients,” says Josh.

In fact, while adviser firms have been integrating technology and scaling innovation for some 30 years, digital services today do far more for a firm’s bottom line than attract millennial business.

“One of the things the pandemic has shown us is that the idea that it’s solely younger people who are wanting and willing to engage digitally, and older people are not, is a lie,” says Tim.

Millennial Advisers

Developing a deeper understanding of how the financial planning profession works, through exposure to a whole range of experiences and soft skills, is essential in client-facing roles. Some larger firms might look to invest in recruiting and training millennial advisers who are well poised to attract viable clients.

Adviser academies and training courses can provide a new generation of professional advisers with the skills needed to anticipate evolving client needs. It will be key for advisers to connect with a younger demographic in a meaningful way.

“Young financial planners who are part of Progeny’s in-house Adviser Academy play a key role in attracting a new generation of viable millennial clients. Many of us are millennials ourselves so we appreciate exactly the challenges these clients are facing, as well as sharing similar values,” says Josh.

Recruiting young advisers could also be key to engaging younger members of existing client families, and keeping a strong relationship going, but it is not the only way to shape a business to welcome this new cohort of investors and savers.

Ultimately, there is no choice for the adviser looking to extend their own horizon, as millennials clients are rising up fast. But taking the time to understand their challenges and objectives may produce the outcomes both they and you desire over the long term.

*Source: Nationwide Newsroom, April 2021 
**Source: Vise Survey, September 2021 

A reminder of the learning objectives

• List the key priorities of millennial clients
• Identify the expectations millennials have of advice services and advisers
• Explain three ways advisers can target millennial clients