Today's Advisory Career

Advising The Generational Divide

How Millennials and Gen Xers are driving broader discussions with advisors

By Kevin Hogan

Mr. Hogan is Chief Executive Officer, AIG Life & Retirement. Visit www.aig.com

Younger generations have been tech-savvy for most of their lives, a fact that may lead some to believe they prefer to rely on technology for financial advice. That’s not, however, always the case.

Even as technology and digital planning tools become increasingly integrated across financial services, millennials and Gen Xers crave something more from their financial professionals. Yes, they want financial expertise—this will always be paramount—but they also want to build a personal relationship with their advisor through which they can gain access to information and resources touching on a broad—and perhaps unexpected—range of topics.

AIG Life & Retirement recently fielded research with MIT AgeLab to explore how clients interact with their financial advisors and to better understand what drives client satisfaction. The resulting study, The Future of Client-Advisor Relationships, shows that millennials and Gen Xers are paving the way for a new approach in how they want to interact with financial professionals and what successful, long-term relationships with these professionals look like.

These younger clients (ages 30-45) desire wider-ranging conversations with their financial advisors that go beyond traditional financial topics. While this trend is particularly true for this age group, we found that clients of all ages are open to and interested in discussing non-traditional topics—such as housing, physical health and identity theft—with their advisors.

Importantly, broadening discussions beyond traditional financial conversational boundaries may actually lead to increased client satisfaction and trust. From there, financial professionals have an opportunity to create or build on a transparent, holistic and personal approach to financial advice.

Reimagining the Ideal Financial Professional

When picturing the ideal financial professional, most think of someone who can play a role in managing a client’s portfolio and planning for their financial future. While this still rings true, many other factors come into play when clients choose their financial advisor—and determine whether to remain with them.

According to our data, more than half of respondents expect their financial professional to help them see their broader plan for the future and just over a third want their advisor to serve as a confidant. Some want their advisor to be a resource connector, assisting them in creating a network of experts on both financial and non-financial matters, presenting a more holistic approach to their relationship. While no one expects financial professionals to be experts on all matters, many already have a robust set of contacts and experts that they can tap into for their clients’ benefit. And by encouraging clients to vocalize this desire, advisors can offer additional services and perspectives for their clients to consider.

Interestingly, millennial and Gen X clients sometimes consider their advisor as more of a friend or life coach, further underscoring their desire for a personal relationship. They also prefer to communicate with financial advisors more frequently than older clients. Nearly half of clients ages 30-45 that participated in The Future of Client-Advisor Relationships study noted that they communicate with their advisor monthly, while middle-aged and older age groups typically speak with their advisors every few months.

Key Areas of Interest for Millennials and Beyond

According to our work with MIT AgeLab, clients want broader discussions with their financial advisors. Retirement readiness remains a key topic, but the conversations clients want to have go much further than that.

Younger clients are hyper-focused on family members’ finances and want to bring that into their personal discussions with financial professionals. Millennials and Gen Xers are also prioritizing topics like current housing situations, incomes, lifestyles and changing family dynamics.

Younger clients are hyper-focused on family members’ finances and want to bring that into their personal discussions with financial professionals. Millennials and Gen Xers are also prioritizing topics like current housing situations, incomes, lifestyles and changing family dynamics...

For older clients, identity theft and fraud prevention are emerging as prevalent topics of concern. Indeed, clients of all age groups are seeking trusted resources to help them navigate the constantly evolving technology landscape, which presents an opportunity for financial advisors to educate both themselves, if they have not already, and their clients—or provide access to experts within their network—to understand how to safely and effectively utilize tools and protect themselves.

In the wake of the COVID-19 pandemic, we can expect physical health to continue as a topic that clients want to discuss with financial advisors. Planning around future care will remain prevalent, but it is also likely that clients will express a desire to discuss their current personal health, as well as that of their partners and older family members.

How to Approach Broadening Discussion Topics

For some financial professionals, it may be challenging to step outside traditional financial conversation norms to address the emerging topics that clients are saying they care about most, especially when the foundational needs remain.

Advisors might consider the following ideas for engaging in broader conversations with their clients:

Accept that some conversations might be uncomfortable. For many, discussing finances is very personal. For financial professionals, it’s central to the job–helping clients honestly discuss their financial situations and plan for the future accordingly. It can be helpful to apply this mentality to other topics such as housing and physical health. While these topics may feel unnatural to discuss, they are on the minds of clients—and can be important contributors in developing a holistic future plan. And again, no one is expecting a financial advisor to have all the answers, but clients do want to gain access to information or resources in connection with these important topics.

Begin conversations slowly and make them personal. Drawing upon personal experience can be a helpful tool in establishing a comfortable setting for clients. Interestingly, conversations about topics such as family relationships, a career change, or a major health issue are most amenable to being placed on the agenda when they are introduced as a story about someone else.

Consider age impact. Different topics produce varying levels of discomfort for different age groups. Oftentimes, younger clients are more eager than older clients to jump into conversations about topics outside financial planning norms. That said, our study found that older clients often acknowledge a willingness to venture into less traditional topics when their financial professional initiates the discussion.

The Importance of Creating and Sustaining Client Satisfaction

Understanding what clients want and need is vital to meeting and exceeding their expectations. Client satisfaction can result in long-lasting relationships, and deeper, more personal client-advisor connections can help professionals provide sound and custom advice.

Expertise, understanding of client financial goals, financial education and the ability to provide clear explanations are long-standing drivers of client trust and satisfaction across age groups. Increasingly, in addition to these highly desirable traits, many clients—especially millennials and Gen Xers—choose and decide to remain with financial professionals based on the advisor’s personality as well as the personal connection clients build with them.

Younger generations also value openness as an important factor in how they work with financial professionals. Our study found they like meetings with their advisors to have a humorous tone, which underscores their desire to view their financial professional as a friend.

Client satisfaction both springs from and leads to trust, a factor that is essential to the longevity of a relationship. Engaging in broader conversations not only builds that trust, but also paves the way for deep and personal client-advisor relationships across age groups. By taking the cue from their millennial and Gen X clients to discuss non-traditional topics, advisors will be positioned well to help meet and exceed the needs and expectations of their clients, today and in the future.

 

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