How Generational Differences Should Define Advisors’ Interactions with Clients

A Review of The Gen-Savvy Financial Advisor by Cam Marston

Wealth Management

Cam Marston and his firm, Generational Insights, provide research and consultation on generational issues.  In his most recent book, The Gen Savvy Financial Advisor, Cam Marston provides a guide to tailoring your financial services to Matures, Baby Boomers, Generation Xers, and Millennials.

Financial advisors have personalized their services to meet the needs and expectations of Matures and Baby Boomers, but Gen-Xers are in their prime earning years, Millennials are developing saving habits they will have for a lifetime, and both groups think about their personal finances differently than their parents and grandparents.

Marston’s book highlights the challenges that financial advisors currently face trying to earn the business of a new generation of investors.  Because wealth management is a business based on trust, clients need to be comfortable with their advisor, and as your client base becomes more diverse, establishing this connection may not be as easy as it once was.  To meet the needs of each generation of investors, you must understand their distinct concerns.

Are We Really That Different?

Stereotyping generations is a risky business, but Millennials like me are accustomed to these stereotypes.  My generation has been accused of ruining home-ownership, marriage, newspapers, chain restaurants, and department stores, while we are known to have a weird obsession with smartphones, avocados, and our dogs.

Consumers’ buying habits have changed,  but why does this matter for your wealth management firm?

While it’s easy to shrug off these stereotypes, the reality is, I wrote much of this post sitting next to my dog I treat like a child, in the house I rent with two roommates, listening to music on a free music-sharing site.  Cam Marston explains that consumers’ buying habits have changed, and financial services are no exception.  But why does this matter for your wealth management firm?

At risk of oversimplifying Cam Marston’s insight into simple generational differences, below is a brief summary of the defining features of each generation and Marston’s suggestions to meet the needs and expectations of each.

Matures

Marston describes Matures as loyal rule followers who are demanding of respect.  In general, they have under planned for retirement and are facing health concerns, but are a “small yet mighty” group.  Marston suggests showing these clients deference and ensuring they are comfortable by providing quiet spaces for conversation, preparing for memory loss, inviting their children to meetings, and confirming they understand your technology platforms.

Baby Boomers

Controlling over half of the wealth in the U.S., Marston describes Baby Boomers as competitive, nostalgic, idealistic, and young at heart.  You can address the needs of these clients by meeting with them in person, showing optimism despite the fact that many are postponing retirement to take care of elderly parents and adult children who still live at home, and recognizing their successes.

Marston further distinguishes between two subcategories of Baby Boomers: Leading and Trailing.  Leading Boomers have begun to reach retirement age, have adult children, have simplified their lifestyle, and are moving investments to more conservative outlooks.  Trailing Boomers, on the other hand, still have children in school and are more focused on paying for their children’s college and building personal wealth.

Gen-Xers

Unlike most, Marston remembered to include Gen-Xers in his analysis, rather than ignoring this in between cohort to focus on Boomers and Millennials.  Gen-Xers are at the peak of their careers; they are tech-savvy, loyal customers, whose referrals should be valued.  They grew up in the information age which means that they are naturally curious and ask many questions.

This provides a unique opportunity for financial advisors.  Marston discerns that financial advisors can earn the respect of Gen-Xers by providing them with insight that they were not aware of after extensive research.  Gen-Xers are a captive audience to a firm’s online database of educational resources.

Millennials

Now the largest generation, Millennials are well-educated, issue-oriented, individualistic, and impatient.  Millennials were greatly affected by the Great Recession which has led them to become risk-averse.  This leads to an inherent disconnect between Millennials’ comfort level with stock exposure and their lengthy timeline to retirement, which suggests they should be investing aggressively.  To meet the needs and expectations of Millennials, Marston suggests transparency, brevity, up-to-date technology offerings, and recognition of their individuality.

Female Millennials have become the most well-educated generation in U.S. history; however, the majority of financial advisors are men (only 16% of CFA charterholders in the U.S. are women).  Financial advisors are more often dealing with female individuals and heads of households, and Marston warns, “Be careful to not make any comments about appearances that may seem […] “creepy.”  While I do not believe that Men are from Mars, Women are from Venus, sensitivity to the current gender environment is key in establishing relationships with female high-earners.

The Great Opportunity of Wealth Transitions

Valuation firms often view the number of multi-generational relationships in a firm as a measure of risk reduction.  This is an increasingly important metric as Baby Boomers are expected to transfer $41 trillion of their wealth to their heirs; however, as Cam Marston notes, 60% of children fire their parents’ financial advisors after they inherit their parents’ wealth.  Cam Marston devotes a chapter of his book on how to manage these generational transfers.

A well-developed relationship with Baby Boomers should lead to an opportunity to work with their children.

This transfer provides a great opportunity for financial advisors, who seek to maintain their relationship with Boomers’ children.  Marston explains that a well-developed relationship with Baby Boomers should lead to an opportunity to work with their children.  However, “The Common belief is that Millennials will not do business with their parents’ advisors.  If you treat the Boomers’ children the same way that you treat Boomers, that will be true.”

While Marston provides great insight into managing relationships with both Boomers and Millennials, I was left wanting more information on how to effectively manage these relationship transitions.

We Can All Learn Something from Marston’s Book

While this book is directed towards financial advisors, there is something for everyone in the client services profession to learn.

  • The increasing importance of online first impressions
  • Offering varying levels of technology to ensure different age groups are comfortable with your offerings
  • Balancing formal and informal relationships

As Cam Marston notes, it sometimes feels that you are just on a different wavelength than your prospective clients.  While the soft skill tips in this book can help you connect with different generations, it is just as important to have a diverse staff of advisors who can connect with clients that have different backgrounds, diverse values, and unique needs.

While advisors are adapting to earn the trust of different generations, this adaptation is not new.  Advisors have always tailored their services to meet the unique needs of each of their clients.  Today the needs of your clients may vary more, which may lead your meetings to look even more different, but your mission as an advisor is still the same: to bring financial security and prosperity to your clients’ lives.