CPA INSIDER

7 ways financial planners can better help Millennials

This generation seeks a blend of automation and a human element.
By Allan Kunigis

With tech-savvy Millennials tending to take a self-directed approach with their money, many financial planners are adopting a service model that pairs automation with a human element, according to a recent report from Accenture.

Millennials are used to gathering information from multiple sources, known as crowdsourcing, and rather than just rely on expert advice, they value partnership in decision-making. This makes the "hybrid model" of service described in the report, The New Face of Wealth Management: In the Era of Hybrid Advice, a good fit, with its combination of access to automated information and consultation with a financial planner.

Along with different planning preferences, Millennials have different goals from earlier generations—a distinction financial planners should keep in mind.

"Our vision of wealth is the freedom to enjoy fulfilling, meaningful experiences, not the acquisition of expensive homes, cars, or other material goods," said Mark Astrinos, CPA/PFS, 33, of Libra Wealth in San Francisco.

So what should financial planners do to serve this important demographic? We asked a few experts for their advice:

Assess and bolster your technological capabilities. "To equip yourself to better serve self-reliant, tech-driven Millennials, do an assessment of your technology and automate anything that doesn't require judgment," Astrinos said. "This can free up your time to do higher-value activities that lead to better client service for Millennials and all clients."

Chris Benson, CPA/PFS, 35, of L.K. Benson & Co. in Towson, Md., prioritizes a nice website, videoconferencing capability, and a portfolio management system that can facilitate real-time instant access while meeting with clients.

"Automation can be a huge timesaver for you and support a better experience for the client, which is critical for financial planners," he said.

Digital technology––including web-based tools and applications––enables quick access, greater transparency, and self-service. That can complement the added value provided by human advisory services.

"When it comes to their money, people will always feel the need to talk to someone and be assured when things get scary," Benson noted.

Toss away old assumptions and paradigms. Millennials are different from previous generations in a number of fundamental ways, according to Kendra Thompson, managing director and head of Accenture's global wealth management practice.

"They look at friction points and move around them. While previous generations sat and listened to and respected an adviser's expertise, Millennials don't have the same respect for that power paradigm. They see an adviser in the same way they see anyone else serving them, and they want to be able to dip in and out of that with no long-term commitment," she said.

"Don't try and enforce yesterday's planning paradigm––designed for the Boomers––on Millennials, or you won't be in the conversation because they're playing by different rules."

Understand Millennials and their aspirations more deeply. We're witnessing a shift in consumption preferences, among other things.

"Millennials, including myself, no longer value the major big-ticket material items previous generations valued and sought," Astrinos said. "We're less interested in the million-dollar homes, large boats, and cars, and we put greater value on experiences, such as travel, recreation, self-development, and other personal interests."

These experiences may require less capital resources, but call on more personal resources, such as time, energy, skills, education, and health. Millennials tend to want to leverage both kinds of resources. To help Millennial clients, find ways to support them in their efforts to reach any goal, material, or experiential. For example, a special fund could be used to pay for a house down payment or an early career sabbatical or special vacation.

Shift your role from adviser to consultant/partner. To serve Millennials well, given all these factors, advisers should shift from the role of authoritative expert to more of a partner or mentor, collaborating rather than dictating. As such, a financial adviser's listening skills and sensitivity to individual client needs and priorities are more important than ever.

"You need to move to the same side of the table as them, be much more transparent, and be ready to dial up or down the level of service to meet the needs of your clients at that moment," Thompson said. "Also understand that you might be one of several sources of information as Millennials follow their familiar crowdsourcing or consensus-building pattern."

To become more of a sounding board or consultant, Astrinos suggested using more open-ended and collaborative questions, such as "What do you think we should do?" and "What are some possible solutions?"

Hone new skills, including empathy, creativity, and motivation. While financial skills will always be important, this brave new world of collaboration and letting Millennials drive the conversation underscores the need for advisers to polish and practice softer––but equally important––skills, including putting yourself in the client's shoes, finding creative solutions, and motivating and inspiring them.

Broaden focus to include more of the here and now. Honoring Millennials' priorities and perspective can mean putting retirement planning, while important, on the back burner initially as you build a relationship and address myriad other goals, Astrinos said. This is especially true for clients who are still in debt, may face cash flow issues, and may not have bought their first house yet, started a family, or reached other critical early adult milestones that call for financial planning. With more pressing needs, they think: "Why should I care about a financial goal 60+ years away?"

"Other generations focused a lot more on planning for the future and ended up forgoing many of the things Millennials are reluctant to give up," he said. "Millennials are less willing to defer their lives for some distant, unknown future."

But, of course, you shouldn't put off retirement planning forever. The Accenture report found that although Millennials were less concerned than Boomers and Gen Xers with "retiring comfortably," they still ranked it as their second-highest priority among 10 investment goals. But reflecting their more diverse goals, Millennials were more inclined than older investors to prioritize "having funds for important events in my life," and they said they are more willing to pay for the best advice possible.

Adapt to rapid change as an organization. With the changes being driven by Millennials, whose aggregate net worth globally could top $20 trillion by 2020, according to a Deloitte study, all financial planning and wealth management organizations must evolve or face the risk of being left behind.

Accenture's Thompson said the entire wealth management industry is moving rapidly. "The key is understanding how to stop doing things that are no longer valuable. The winning firms will be those with aggressive, differentiated strategies that are well-executed. In every interaction, you have to offer value, and that value must be mutually agreed upon by the firm and the investor."

Allan Kunigis is a freelance writer in Shelburne, Vt. To comment on this article, contact Chris Baysden, senior manager of newsletters at the AICPA.

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