As the accumulation years for boomers continue to dwindle, it's more evident that future growth for advisors will depend on how well they can cultivate their successors in Generations X and Y.
We've examined the psychology of younger generations in general, and women in particular, in previous articles, but what about Gen X and Y men? How can advisors build trust with younger men? When we sought advice from experts who have worked with this group, we learned seven surprising facts.
1. Younger Than Their Age
"Men in their 20s and 30s generally have a harder time moving into their adulthood than females of the same age," said Cam Marston, author of "The Gen-Savvy Financial Advisor." "Advisors have to realize that many of these males are going to be seven years younger than their biological age suggests."
Marston, president of Mobile, Ala., consulting firm Generational Insights, said that younger men under the influence of delayed development believe they are "bulletproof and that beer is food." He added, "So that gives the advisor a real challenge, being with someone who measures their future in hours, not decades."
2. Seeking Short-Term Results
How do you plan for the future with a young man who thinks in terms of immediate gratification?
Marston suggested telling these clients, "'There's peace of mind in developing a plan for your future, whether it extends over three months or two years.' So the young investor might think, 'I don't have the money, but I have a plan for the money.' That not only satiates the need for instant gratification but will ease some anxiety and stress." He also advocated creating an agenda with items that can be checked off during the course of a meeting, giving the client a sense of immediate accomplishment.
Investment Advisor columnist Angie Herbers, a practice management consultant, has also noticed differences in working with young men. "The baby boomer generation wanted to have quarterly or annual meetings," she said. "Younger women still like that structure, that consistency, but younger men want you to be available when they need you."
This has to do with the way they were raised, she explained. Accustomed to finding anything they want or need by checking their phone, they have the mindset that they should be able to get any information they need immediately.
"If you want to attract younger men, you have to be able to compete with how their brains work," Herbers said. "It doesn't mean you have to drop everything to talk to them or answer their text messages. You just have to provide systems that allow them to get information when they need it."
When there's something they want to know, she said, the first thing they normally do is Google it. If you teach them "how to use a bucket of technological tools you've provided, then they don't have to Google and they feel loyal to you," she suggested. These tools might include anything from an electronic worksheet if they're struggling with cash flow to guidelines for starting an education account.
Younger men's short-term focus tends to change with age and responsibility. "Anyone who has young children will begin taking a longer view of the future," Marston advised. "But in their 20s and early 30s, they're still comparatively short-term-focused."
3. Tech-Savvy, but Favoring Face Time
Abacus Wealth Partners in Los Angeles deals with many more young clients than the typical RIA because they've eliminated investment minimums.
One of the eye-opening comments we heard from Abacus President J.D. Bruce is that younger clients are not necessarily using technology to organize their lives better. "Sure, young people are perfectly happy to stare at their phone and are more likely to use social media like Twitter to communicate with each other," he told us. "But that doesn't translate to being better able to log in to review their quarterly statements or use electronic signatures to sign paperwork. Many of my 60-year-old clients are happy to sign documents electronically, but my 20-year-old clients just want to talk on their phone because their email inbox is a disaster."
An April 11 ThinkAdvisor.com article reported that Michael Liersch, director of behavioral finance at Bank of America Merrill Lynch, said during a SIFMA private wealth conference that younger investors prefer face-to-face meetings with their financial advisors. Technology can augment these interactions but does not supplant them.
