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By CUSO Financial Services, L.P.
Let’s assume that we in the financial services community have done our job of preserving wealth for the next generation. If so, there stands to be a large transfer of wealth to Generation X (born in the 1960s, ‘70s, and earliest ‘80s) and Millennials (born after 1982). In addition, many individuals in these demographics are actually good savers, with college degrees and good earning potential. Older Generation Xers are just entering their highest earning-capacity years. A communication gap may not be the only challenge for financial advisors who don’t fit into one of these two demographics. Are you operating on the same frequency? Or shall we say, “Are you even connected to the same network?” Here are a few tips for working with Gen Xers and Millennials in your financial institution branch.
Have an online presence. Many Generation Xers and Millennials conduct a significant amount of research online prior to ever approaching a person. When they reach out, it will be to other friends through social media or via online and mobile business directory services. If they get your name, be sure they will Google you, review your webpage, and look at your social media profile. As this group is not likely to come in for a seminar, consider putting some free training online. In the training, you can give some basics and entice potential clients to contact you for more information. Check what your financial institution program already allows for online media. But be careful not to overstep what is allowed.
Offer mobile and online investment services. Can your clients access information about their investment accounts online? Is there access through your financial institution’s website and mobile banking platform? Can they sign and send you docs remotely via a mobile device? Do you offer online profiling questionnaires and account reporting tools? Know the answers to these questions and be prepared to say yes to all if you want to capture business with a younger, more mobile clientele. You should be able to offer remote delivery — either online or via a mobile app — of your services for every step of the investment process.
Vary your advertising. Since many in the industry target those near retirement, your advertisements most likely are focused on that demographic as well. Consider adding some specific marketing pieces directed to the younger demographics. Photos of gray-haired people fishing or playing golf might not be as attractive to the younger professional with money to invest. Instead, add some pieces targeted to a younger clientele.
Get connected in your branch. Generation X and Millennial prospects may already have significant business with your financial institution through other services such as mortgage and loan departments. Does your program promote referrals between departments? Have you trained your branch staff to look for the right referral? You can help generate referrals by training branch staff to look for a few clues that a Generation Xer or Millennial might be interested in investing. Some clues may be large balances in checking or savings, checks from other investment firms, or comments about a new job or the market.
Look in your own book. Consider looking at the clients you already have and their families. Look at your clients who have a large death benefit on their annuity contract or the beneficiaries listed on IRAs. Do you have a marketing campaign to those beneficiaries? Consider starting to help this group now with small IRA contributions and rollovers. If you already have an established relationship, you are more likely to capture that rollover or inherited business. When meeting with your older clients, consider involving the beneficiaries in the discussions.
Get started. Now let’s assume you actually get to speak with a Generation X or Millennial prospect who has money to invest. You can use your normal fact-finding or profiling tools, but opting for online profiling tools may suit them better. The same basics apply to this demographic as with any other prospect. Ask about rollovers through job changes, inheritances, and their individual goals. Don’t assume any stereotypes about Generation X and Millennials. Many in these demographics are goal-oriented savers with a buy-and-hold strategy. Just as with any age group, there are vast differences in preferences based on regional issues, ages of parents, personality, education, and career choices.
Communicate the way the audience wants to communicate. We still speak the same language. However, Generation Xers and Millennials are less inclined than prior generations to have phone or face-to-face contact. The first contact from this group will likely be through email or online. Respond as fast as possible. Generation Xers and Millennials are used to instant access through email, mobile applications, and texting. You snooze — you lose. Your younger clients will be surprisingly forthcoming in email; you need to be cautious about what you discuss in emails, even though they will not. Remind them that private information in an email may not be secure on their mobile device.
Know the culture. Generation X and Millennials grew up during significant market fluctuations while a lot of negative media surrounded financial services. Think Occupy Wall Street and the 99%. As a result, many in these groups have an inherent distrust of financial services. In order to succeed, you will need to present yourself as one of the 99%, not the unattainable elite. This group in particular has a strong self-directed approach (note the research mode described above prior to ever meeting with you). Find out through your fact-finder how sophisticated these clients actually are.
Unfortunately, the self-informed investor might also be misinformed. You can equate this to diagnosing your own physical ailments online through web searches or medical sites versus seeing your personal doctor – some of the information might be accurate but the context varies widely. Be prepared to explain investment options and to educate them properly without speaking down to them. They have a lot of knowledge; put it in the right context.
Speak to their needs. When it comes to Generation X we might be talking about saving for college, retirement needs, or mortgages. This group isn’t expecting Social Security to support them. They are unlikely to have a pension. They are more likely to move jobs frequently as they climb the ladder. Think rollovers.
When it comes to Millennials we might be talking about planning for a wedding, when to pay down student loans, or how to save for mortgages. This group definitely isn’t expecting Social Security and is unlikely to have a pension. This group also plans to move jobs frequently in order to succeed.
Have the right products. Long-term, high-fee products might not be the best approach with this group that has always demanded free checking and has a long time to go for retirement planning. Think fee-based, asset allocation, or other advisory-type models using lower fee products within the platform. Consider insurance that they might need to protect their own children.
Be confident. You already have the established skills you need in assessing client goals, educating clients on the need for financial planning, and presenting yourself as the professional lead. Incorporating just a few of the tips above in how you approach younger clients will help you succeed through the wealth transfer and on to the next generation.
To learn more ideas for promoting investment services, visit our blog today at http://www.cusonet.com/index.php/blog.
Monica Daggs is SVP of Trading and Operations at CUSO Financial Services L.P. and Sorrento Pacific Financial, LLC
Sister broker-dealers CUSO Financial Services and Sorrento Pacific Financial help financial institutions build successful investment programs. We deliver flexible yet efficient planning, retirement, investment and insurance solutions to boost your financial growth and deepen relationships with your clients. Call 1-800-686-4724 or visit www.cusonet.com and www.sorrentopacific.com for more information.
This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.
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October 19, 2015
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