The Wealth Transfer: Getting Younger Clients

I’ve given some thought lately to lowering the average age of my clients. It’s an issue most financial advisors deal with when they look through their book of business and realize that most of their largest accounts are people in their 60’s, 70’s and older. In my experience, the reason for that is two-fold: first, older people really do have more money. It’s a combination of demographics (there are currently tons of baby boomers out there controlling trillions of dollars in assets) and the fact that people both come into more money at later ages and, concurrently, become more interested in the management of their assets as they near the distribution phase. The other reason why advisors have a hard time attracting young, wealthy clients is that younger people simply don’t focus as much on saving and investing as older folks. Regardless of all the statistics about the time value of money and how much of an advantage a young person would be at later on if they saved more now, it’s simply not how the world works. I have plenty of clients who are in their 20′s and 30′s, earning well over $100,000 per year who save very little each year, despite my ranting. Granted I work and live in New York City where earning $100,000 makes you, well, poor. The handful of young clients who do max out their 401k and save beyond that will clearly be less stressed later on when life becomes more expensive (think: college tuition) and saving becomes more difficult.


Despite these reasons why it may be easier for an advisor to focus on older clients, a recent article in Investment News cites that nearly twenty billion dollars in revenue is earned annually by advisors from clients under age 50. We’re talking about trillions of dollars in assets controlled by Generation X and perhaps even more importantly, Generation Y. Attracting these younger clients involves a learning curve for advisors that requires a different style of marketing and communication, including social media and constant networking in casual environments. This is a learning curve which many older advisors simply won’t embrace because they are paralyzed in their old-fashioned marketing and/or earn enough money that they don’t need to change. This is where the smart advisors will come in and cater to this market the way they want to be catered to. This may involve Skyping with clients across the country, learning to text faster and more often, and keeping your website and/or blog active and current (eh hem).

Why else might younger investors have less affinity to financial advisors than their parents? How about the intense volatility and lack of total return from the stock market over the past 10 years? A 32 year-old executive in today’s world has watched the bursting of the tech bubble and the real estate market collapse since graduating from college. I’m one of them and it’s easy to understand why younger investors hold on tightly to any money which they successfully save. It’s a similar mentality to what our grandparents did who grew up in the 1930′s during the Great Depression and were scared of losing any family savings which still existed after the 1929 market collapse.

The difference with a person in their 50′s is that they had those sweet decades of the 1980′s and 1990′s when the market gradually increased in value seemingly every year. Some of those investors have had the discipline to reinvest dividends and sit tight during this lost decade of market returns. But some younger investors have decided to stay away. The problem with staying away is that good financial planning involves more than just stocks and bonds; it involves proper estate planning, making tax-smart decisions, and having the right insurance policies in place to protect your family and business. Most of the young people I know haven’t embraced smart financial planning yet.

So, I’ve decided on a few different methods of bridging the generation gap in my business. The first and easiest thing for me to do is request meetings with my older client’s children, often people in their 40’s, 30’s, and younger. Creating a relationship with this younger generation will preserve many of my important client relationships, and ensure that the younger generation is making smart moves now to deal with their own futures.

The other important thing to do, which I mentioned earlier, is going beyond the typical marketing of seminars and free dinners. That stuff just doesn’t work as well with my generation. Being active on the Web and constantly networking with friends of friends is a must. I think social media is an urgent medium for advisors to connect with Generation Y as well, but being employed in a regulated industry such as financial services makes it exceedingly difficult to do so. Hopefully these policies will become more accommodative as the industry evolves and realizes that social media is here to stay.

As always, feel free to reach me with any questions or comments.
Russell Bailyn

Wealth Manager
Premier Financial Advisors, Inc
14 E 60th Street, #402
New York, NY 10022
P: 212-752-4343 *31
F: 212-752-7673
rbailyn@premieradvisors.net

Securities and certain investment advisory services offered through: First Allied Securities, Inc., a registered Broker/Dealer. Member: FINRA/SIPC. Premier Financial Advisors, Inc. is a Registered Investment Advisor. First Allied Securities & Premier Financial

3 thoughts on “The Wealth Transfer: Getting Younger Clients”

  1. You have to live on less than you make and stop looking at debt as a privilege or a right and see it for what it is…a product that Americans have been sold and told you cannot live without. I started the process in 2009. Through temporary sacrifice, my wife and I managed to payoff all consumer debt we had ($26,800) within 6 months while increasing our giving and saving. Since freeing up our incomes previously used for debt service, we now have 6 months worth of expenses saved up and have a real emergency fund to cover nearly any disaster that may come up. We do not possess any credit cards nor will we ever again. You cannot throw a personal finance book at someone in debt to help them. You have to present them with a new paragdigm contrary to what the popular culture has taught them. Most people fail to realize the psychological and emotional impacts of borrowing money.

  2. Sorry, I sent you the wrong comment. I was typing on my notepad and accidentally paste it here. Just please disregard my first comment. Anyway, I am really pleased that I was able to stumble upon your weblog whilst looking on Google. Thank you for this great article!

  3. Thanks for the articles. I agree with you that RIA should look for younger generation for future income. But the key problem may be that today American are living paycheck to paycheck. Most college graduates have student loan, credit loan, and so on. Despite these, they are eager to take a loan for a fancy car or house, which further decrease their ability to invest.
    Culture of spending future income should be changed to culture of saving before we can persuade them the merits of investing and compounding effect.
    Looking forward for your next article.

Leave a Reply

Your email address will not be published. Required fields are marked *


× six = 42

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>