7 Best Practices of Successful NextGen Advisors

This is a summary of a panel from the Money Management Institute’s 2014 Annual Convention.  The panel included representatives from a wide range of distribution channels, including a wirehouse, insurance broker-dealer and an online advisor.

Moderator: David Berkowitz, President, Lincoln Financial Network
Panel:   Eli Broverman, Co-Founder & COO, Betterment, LLC
James J. Detterick, Managing Director, Corporate Client Group Director, Morgan Stanley
Andrew J. Wigzell, Senior Financial Planner, Barnum Financial Group, MetLife

How important is it to establish relationships with children of Baby Boomer clients?

Over the next decade, Baby Boomers will be retiring at the rate of 10,000 per day.  Since Boomers make up a large percentage of most advisors books, if they don’t reach out to their children, eventually they won’t have clients left at all, Wigzell pointed out.  As a 41 years old advisor, Wigzell will be retiring sometime in 2037.  He said that he plans to keep adding clients who are younger than he is so that he will have clients to manage when he retires.

Wigzell is used to working with clients in the 49-65 year age bracket, so he recently added a Gen Y’er to his team to focus on reaching younger generations through the use of technology. 

In sharp contrast to the other panel members, the median age of Betterment clients is a mere 35 years old, Broverman reported. The firm’s methodology of engaging with investors through digital means is the primary reason for this, he stated.

Broverman quoted a statistic that 71% of Gen Y’ers would rather visit the dentist than go to a physical bank branch.  (He didn’t mention who came up with that unusual question or how many people were surveyed, but I would imagine they have very healthy teeth)  While it’s well-known that younger people are more inclined to use technology, another statistic he cited was that 4 out of 5 people across all demographics prefer to bank online.
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Why Don’t Advisors Have Tools to Provide Holistic Advice?

 “It’s not what you look at that matters, it’s what you see.” — Henry David Thoreau

According to a recent survey by Certified Financial Planner Board of Standards, Inc., 91% of consumers expect that the advice they receive from a financial advisor will take into account their total financial situation.  Yet, many advisors are still myopically focused only on managing their client’s assets.  This renders them unable to serve the 70% of consumers who prefer an adviser who has the ability to look at their whole financial situation, as reporting in the same survey. Continue reading