What younger clients need from CPA financial planners

Most people who seek out a CPA financial planner are well past age 40.

Yet, getting professional advice early can help younger people take crucial steps toward accumulating assets and managing spending.

Below, two CPA/PFS holders share how advisers can adapt their approach to better serve clients under 40 — referred to here as younger clients.

Attracting younger clients

“Many of my [younger] clients are the second and third generation,” said Erin Itkoe,CPA/PFS, CFP, president and wealth adviser at Luminescent Wealth Management Inc. in Scottsdale, Ariz. “In my experience, younger people are generally not looking for financial advisers, but I encourage the parents or grandparents to have them talk to me. The parents may have set up accounts for the children, which is a gateway to our working together.”

Andrew Christakos,CPA/PFS, partner at Christakos Financial in Cranford, N.J.,says that some younger clients have found him through his website’s “call to action” section. Like Itkoe, he has also received referrals through clients who want their children to understand the planning process.

Christakos has observed a difference in how younger clients choose an adviser. “I have seen that the younger generation tends to be more critical in their selection process than Baby Boomers, with more multistep interviews and actively interviewing several advisers at the same time.”

Goals and starting points

The motivations and concerns of younger clients differ significantly from those of older ones.

“Their need for advice will depend on their age and where they are in their lives,” Itkoe said. “They may first need a short-term plan for how to make ends meet, including cash-flow planning, creating a budget, and paying down debt. We discuss their life goals, like education, getting married and paying for a wedding, having children and saving for their education, where they will live, and if they want to travel.”

In the first meeting, Christakos reviews the information collected and may create a balance sheet for them. For some clients, this is the first time they’ve seen such a document, “which leads to interesting conversations about whether it is what they expected.” He notes that because of the recent appreciation in real estate, a larger percentage of their net worth may be from an asset that is unlikely to be liquidated in the short term.

Goal setting is challenging for younger clients, but the exercise is helpful. “It is difficult for them to project, so we typically create short-term goals within five years covering what assets they have and tools they need to accomplish those goals, with really generic longer-term goals,” Christakos said. “If they can’t come up with specific goals, we may create specific anti-goals (things they do not want to do with their money or to have influence over their lives).”

Both Itkoe and Christakos emphasize to younger clients that planning is an ongoing process. The initial plan forms a baseline and then is modified as life changes.

Communication and use of technology

One of the biggest differences in working with younger clients is their tech savviness. “I find younger clients are better at communicating because they grew up in an environment of using emails, texts, and electronic calendars,” Christakos said. He finds them to be generally more organized.

Itkoe generally agrees, although she notes it depends on the person’s personality. “Younger clients tend to be better with email rather than phone calls, and I try to avoid texts,” she said. “We use virtual meetings for their convenience, although I have found that some younger clients prefer face-to-face meetings as my older clients do when possible.”

Younger clients tend to be more comfortable with use of social media and AI. This can present both opportunities and challenges for advisers.

“Because of the overwhelming amount of information available through social media, which may or may not be accurate, and the ability to use artificial intelligence tools, I find younger clients ask me more very specific questions,” Christakos said. “For example, ‘Do I need a specific type of trust?’ rather than asking about trusts in general. It is like using WebMD for medical advice online, where getting more information than necessary could be dangerous, and you might be better to ask your doctor first.”

Younger clients may be more comfortable using planning tools or financial software. “I can give them access to eMoney [financial planning software] so they can see their assets and progress, with action items to complete within the tools,” Christakos said.

Advisory approach

In terms of frequency of contact, “younger clients tend to want to meet with me once a year, and then I reach out as things come up,” Itkoe said, while she generally meets with retired clients twice a year in the spring and fall. She notes that the meeting process is similar, using outputs such as planning checklists and performance reports for investments.

However, “prior to our meeting, I prepare an agenda of discussion items based on the client’s age and specific situation,” Itkoe said. “Based on their age, I want to educate them on relevant general topics, see if they have already thought about them, and explain everything so they know their options, and then they can decide if it’s something they need to do.”

“It can be a lot for clients to understand at a meeting, especially if this is their first experience working with a financial planner, so I like discrete action steps, small pieces that are easier for them to understand and accomplish,” Christakos said.

Confidentiality is important. Advisers who have both children and parents or grandparents as clients must maintain confidentiality with each, unless the child explicitly indicates they want information shared.

In between meetings, Itkoe provides all her clients with the same quarterly financial planning newsletter (with interim updates). “I find this is helpful for younger clients, because it provides them with topics they should be thinking about longer-term.”

“As their lives evolve, the planning evolves,” Itkoe said.

— Maria L. Murphy, CPA, is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact Dave Strausfeld at David.Strausfeld@aicpa-cima.com.