Millennials – The Next Great Client Base

But as generations grow, they tend to seek new advisors

by Helen K. Simon DBA, CFP, RMA and Shaun Hoyes, MBAA

Ms. Simon is CEO of Personal Business Management Services and Professor of Finance at FIU in Miami, FL. Connect with her by e-mail:
Mr. Hoyes  is a Senior Financial Advisor at Personal Business Management Services, LLC in Ft. Lauderdale, FL. Connect with him by e-mail:

When financial advisors formulate any kind of roadmap for their client’s financial future, the client’s family is often a major focus point of such plan formation. Understanding the advisor’s role when making major financial decisions pertaining to the family, clients will often look to the advisor for guidance on matters that extend beyond money management and expect an advisor’s counsel on how to deal with wealth within the family structure. This importance placed on the family in client relationships acts as a background for an issue increasingly affecting the way financial advisors do business: Generation X & Y becoming the next generation of wealth holders. Unlike their baby boomer parents, Generation X & Y have a different set of needs, concerns, and expectations when seeking out to achieve financial independence and stability.

The Problem

A survey of financial advisors conducted by US Dimensional sought to demonstrate the likelihood a client’s child would leave their parent’s financial advisor once the parent died. According to the study, 40% of firms had implemented a strategy to deal with the next generation of clients, where only 17% of advisors admitted that they established communication with the next generation. According to these polled advisors, 45% of clients’ assets had been retained after a parent died; only 2% of clients’ assets were retained when the second parent died (2012-2013). These statistics reveal a trend that can negatively impact the traditional financial planning business model if advisors neglect to embark on a forward-thinking approach to financial advisory services.

Multiple factors that come into play when explaining the motivations for the children of clients to leave their parents’ financial advisor, however these explanations revolve around the client relationship and the development of trust between the parent’s advisor and the child. In the course of maintaining a client relationship, it is often a priority to maintain confidentiality of client information. Such confidentiality may involve keeping certain information from the child’s knowledge, which in turn can create resentment toward the advisor, thereby diminishing the chances of building a trusting relationship with said advisor. Another factor behind a deteriorating relationship between an advisor and their client’s child is the inclination of advisors to focus solely on the client. Advisors may believe that being seen as delving “too deeply” into a family’s internal issues will send the wrong message not only to the client family, but to the firm the advisor may work for. This neglect to establish a connection with any immediate family member, in this case the client’s child, will nonetheless make establishing any kind of future relationship between the client’s child and the advisor difficult.

When seeking out financial advisory services, there are different standards used between baby boomers and their Generation X & Y children that stem from underlying cultural, social, and economic themes. Generation X & Y may not be entirely satisfied with the traditional model of financial advising their baby boomer parents have grown accustomed to. When dissecting the underlying themes responsible for these differing standards, Generation X and Y hold unique technological (i.e. mobile application utility) and economic (i.e. coming of age in the greatest economic downturn since the Great Depression) experiences.

How This Problem Affects Financial Advisors

The prospect of client children leaving their parent’s financial advisor in large numbers is a cause for concern mainly due to (1) the relative size of this group, and (2) the amount of money they are projected to inherit in the coming years. According to a Nielson report, Generation Y consists of a population of 77 million, which constitutes 24% of the American population (Foster 2014). Generation Y comprises the largest population group by generation since the baby boomers. While conducting a TD Ameritrade 2012 survey of older and younger investors, it was noted that the children of baby boomers are set to inherit roughly $18 trillion over the next 35 years (Jamieson, 2012).

In discussing the different ways advisors can attract millennial clients, Badorf (2013) compiled research revealing that more than $41 trillion is expected to exchange hands between generations over the next 50 years; such transfer of wealth would be the greatest in U.S. history. These projected figures highlight the economic impact Generation X & Y will have in the United States as baby boomers progress through their retirement years. It will become virtually impossible for any forward-thinking advisor to ignore this group when reaching out to prospective clients.

Multiple factors that come into play when explaining the motivations for the children of clients to leave their parents’ financial advisor...

In overcoming this potentially disrupting trend in the financial advisory industry, advisors must be proactive and make a concerted effort to reach out to Generation X and Y early on in their productive working years. Research has shown that members of Generation Y are less likely to have regular contact with a financial advisor when compared to their parents; younger milennials were 41% less likely and older milennials were 34% less likely (Foster 2014). Although most members of Generation X and Y are no longer minors, in general advisors should strive to develop relationships with their clients’ children to the degree that the advisor becomes a recognizable figure in the child’s life. This presence in the child’s mind will allow for a healthy communication line between the advisor and child, thereby increasing the advisor’s chances of retaining the child as a client in the future.

Grubman & Jaffe (2010) discuss the importance of enhanced client-relationship skills in retaining the clients’ children as new clients themselves and the positive impact on client satisfaction and loyalty such skills hold. “Wealth transfers across generations are a point of vulnerability for firms; families tend to seek new advisors when a new generation takes over.” They also discuss the focus financial advisors place on the family dynamic and how it has become “a mark of competitive distinction” for some firms and institutions. This competitive distinction gives the advisor the ability to differentiate their business in the marketplace. Nonetheless, advisors can use this ensuing generational shift in a client base as an opportunity to enhance and improve their operations and client services when taking into consideration the family dynamic in client relationships when it comes to the client’s children as future wealth holders.

An important ingredient in effectively reaching out to Generation X & Y as potential clients is sharpening ones appeal towards this group. Advisors must understand the communication mediums most utilized by this technologically savvy group. As is the case with any group of target prospects, advisory services offered must be tailored to the group’s specific needs and expectations. In the case of Generation X & Y, services that include 24/7 online access and mobile application capabilities are offerings that are increasingly expected from service providers. When it comes to the advisor handling the day-to-day interaction with clients, having advisors and clients similar in age will provide setting where both can more easily identify with one another. If firms provide for the necessary work atmosphere, Generation X & Y advisors will be equipped to address the needs and expectations of Generation X & Y clients in all aspects of service offerings.

Ideas For The Future

As discussed, this trans-generational phenomenon should not be seen as a doomsday scenario, but more as an opportunity to be seized upon if the right course of action is taken. In preparation of this industry-wide change, advisors should use the ensuing changes from this generational shift in their client base as an opportunity to restructure their businesses and service offerings as this change is destined to take place in the future. In discovering the best strategies for implementation in order to ensure the appeal of service offerings to Generation X & Y, researchers may find it best to focus on technological utilities attributable to his group, as well as this group’s expectations of financial service providers in terms of communication, flexibility, online access, and advisor availability.



Badorf, W. (Nov. 2013). Smart Ways to Win Millennial Clients. The Smart Advisor.
Casey, J. (2006). Work-Family Information On: Generation X / Generation Y. Effective Workplace Series, Sloan Work and Family Research Network – Boston College, Issue 4.
Catalysts for Change – The Implications of Gen Y Consumers for Banks (2008). Deloitte Center for Banking.
Foster, L. (2014). Financial Advisers: Do You Have a Strategy to Attract Millennials?, Enterprising Investor – CFA Institute.
Grubman, J., & Jaffe, D. (2010, 12). Client Relationships and Family Dynamics. The Journal of Wealth Management, 13(1), 16-31. doi: 10.3905/JWM.2010.13.1.016
US Dimensional Advisor Benchmarks Survey (2012-2013). Dimensional Advisor Benchmarking. Dimensional Advisor Fund Conference (April 24, 2014) Santa Monica, CA.

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