Another Reason to Court Younger Clients – Business Succession Planning

Young ClientsBy Cory Schmelzer

I had been thinking about financial advice for families, estates and family owned businesses recently when I ran across the CNBC article below, 3 reasons financial advisors should court younger clients by Tim Maurer.

Tim makes excellent points, and I would add my own:

Financial Advisors should court younger clients because they are likely to inherit or acquire a huge amount of business from the Baby Boom Generation in the next 5-15 years.

According to the U.S. Bureau of Labor Statistics, there are presently about 30 million small businesses in the U.S.  They are collectively worth over $10 trillion. Approximately 60% of these business owners were born before 1964, which makes them part of the baby boom generation, and nearing retirement age.  Look at it this way: A Baby Boom business owner is turning 65 every 57 seconds, and that will continue for the next 15 years.

Where do all of these business owners turn when they decide to sell their businesses or plan their succession? … probably not to other baby boomers.  The strategic planning for business succession is an area where Financial Advisors can bring real value both to the party who is planning on retiring or selling a business, as well as to the party who will be running a small business.

In terms of the complaints that Gen Y is “entitled” and Millennials are “ungrateful and distrustful”, I would put forth the following:

“Our youth now love luxury. They have bad manners, contempt for authority; they show disrespect for their elders and love chatter in place of exercise; they no longer rise when elders enter the room; they contradict their parents, chatter before company; gobble up their food and tyrannize their teachers.” – Socrates 469 b.c to 399 b.c

Clearly, generation gaps are nothing new.  Just as they did in Socrates’ day, elder Advisors need to step up and assist younger clients, not only because they “should”, not all of “them” are bad, or because they may be profitable “someday” – but because they need and want financial guidance today.


3 reasons financial advisors should court younger clients

by Tim Maurer

Last month I attended a presentation that explored, in depth, the notable differences and financial tendencies of several generations, from the silent generation through the millennials.

The presentation described certain representative traits perceived as common among each generation and what financial advisors should consider when communicating with members of them as prospects and clients.

When discussion of the younger generations came up, I noticed advisors around the room rolling their eyes and scratching their heads. The expert at the front of the room was providing well-researched data to help us understand what is important—and less so—to these generations and how we might consider breaking through to them.

But, as the attention of this group of well-heeled advisors descended into a collective yawn, the presenter scurried to wrap up before answering the most important questions:

  • Why exactly should financial advisors dedicate themselves to working with younger clients?
  • Why should advisors apply valuable time and money to crafting services and messaging for a demographic niche notorious for inspiring descriptors such as “entitled,” “ungrateful” and “distrustful”?


Well, here are three reasons why advisors should concern themselves with how to reach younger clients and what to offer them.

  1. On principle: As a matter of principle, the advisory community has an obligation to serve those of every generation and demographic. The broader financial industry fashions itself as a profession, despite more than a century of evidence that shows it is predominantly a sales operation. True professions—such as medicine and law—find a way to serve every demographic.

This doesn’t mean that you have to drop the profitable niche you’ve worked so hard to craft, but it does mean that there should be someone to whom you can refer younger prospects. If we’re to make the leap from industry to profession, we have to find a way to serve even those we “can’t afford” to help.

  1. Pragmatism: Practically speaking, there’s more sizzle than substance to the entire notion that younger generations—especially the millennials—are a lost cause and not worthy of advisors’ attention. Much like the evening news, it’s the bad apples that get all the attention. But as a college instructor for the past several years, during which time I’ve interacted with hundreds of students among the “entitlement generation,” I have found them to be no more self-serving on the whole than the generations casting aspersions.

In fact, I find working with younger generations to be especially rewarding. While their planning scenarios aren’t likely to challenge the depth of an advisor’s knowledge, the breadth of the work is. Unlike a wealthy retiree, a young couple with 2.5 kids, a yellow Labrador retriever and a white picket fence is quite desperately in need of counsel across the planning spectrum—cash flow, net worth, education planning, tax planning, investment and insurance planning, retirement and estate planning.

And also unlike the “A” client, whose situation our work may improve from very good to very very good, solid planning early can have a compounding benefit over the lifetime of a younger client. Such work offers a personal reward untouched in the realm of the ultra-affluent.

  1. Patience = profit: Lastly, patience will lead to profit. Let’s be honest: The real reason advisors don’t want to work with younger clients is because there isn’t enough money in it. The only way to make a noticeable profit with young folks is to sell them a disability-income insurance policy they don’t want or a whole-life insurance policy they don’t need. Fee-based and fee-only planners, however, simply struggle to justify working with younger clients because there’s not much profit in it. But there will be.

My generation—Generation X—is just starting to attract attention from planners as a few of us begin to glimpse advisors’ minimum-asset thresholds. But who do you think your “A” clients will be in the future? It’ll be the “kids” who are currently in their 30s and 40s—maybe even their 20s. Think about the loyalty it would breed if you were willing to invest in them before they were highly profitable.

You’re busy and your time is valuable. Finding a way to serve younger clients isn’t likely to make or break your practice in the short- or even mid-term.

Doing so, however, could meaningfully reduce the cost of finding new clients in the future if you’re creating a business that you hope will outlast you.

In addition to the future financial reward, I’d wager that you’d find the work itself incredibly rewarding—and that makes sense, because it’s simply the right thing to do.

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