The case for taking on young clients

By young investors, I mean Canadians who are young in their investing journey, or at least in their advised investing journey. This group includes millennials and older Gen Zers (born between 1997 and the early 2000s).

Let’s consider the reasons these potential clients are underserved, and suggestions for how to attract and service them.

Why are young investors underserved?

There are many reasons this large and not-very-homogenous group is underserved by most advisors. One key factor is that many believe they do not have a lot of investible assets.

Millennials turn between 29 and 44 years old this year, which means they’re past their early career stage. Those who’ve started a family are well into the asset accumulation phase.

According to a Financial Post report on Statistics Canada data, the average net worth of a millennial household was $633,467. Real estate is a big part of that figure, and they’re at a life stage in which debt is on the high side. Clearly though, there’s wealth there — especially among elder millennials.

The older members of Gen Z are more likely to be new to their careers. Some have started families, but their kids are young. One key difference from millennials is that they are even more digitally savvy. While millennials were digital pioneers, Gen Zers were born into digital innovations and take them for granted.

Many of these young people are already investors. They gravitate to robo-advice and mobile apps, and they’ve taken to the concept of investing at a young age, partly out of a fear of missing out.

Gen Z has consistently lower levels of financial literacy and confidence than millennials do, which means they need your help. Currently, they actively seek financial education and advice from social media, family and financial influencers.

The opportunity

In Canada, millennials and Gen Zers now make up approximately half of the working-age (i.e., investing-age) population. According to Statistics Canada’s 2021 census data, more than 33% of working-age Canadians were millennials and over 17% were Gen Z. These figures will continue to grow.

Again, millennials have savings to invest — especially the elders of that group and the relatively wealthy. Gen Zers are motivated to invest. And as they begin to accumulate wealth and start families, they too will require more personalized financial advice and guidance given their low levels of financial knowledge.

There is another reason to work on building relationships with these two underserved groups. They’re the ones set to benefit from the millions of dollars their parents and grandparents are preparing to leave them when they pass. It will be much easier to attract these clients early in their investing journey and keep them, than it will be to try to entice them away from another advisor later.

Both groups will benefit from advice to navigate the complexities of the wealth and insurance marketplaces as their needs evolve to require both investment and protection solutions. They will be especially open to advice when the markets are as volatile as they are now.

However, we must recognize that their goals and expectations will not be the same as their parents’. Similarly, their communication and engagement preferences have been shaped by their digital fluency and their comfort with digital apps. We need to be cognizant of these factors as we seek to attract them as clients, and then satisfy them through ongoing service.

A few suggestions for advisors:

Offer financial planning. To differentiate from digital advice and demonstrate value, it is essential that advisors seeking to attract young investors offer financial planning and personalized goal setting. These potential clients know how to access investment strategies without an advisor. So, that offer on its own will not be sufficient to attract or retain them.

Leverage technology. While technology is necessary to support the relationship, a shiny new mobile app will not be enough to attract or retain these clients. They already have those. Instead, leverage technology to support client interactions and communications. Many of these clients will be less willing or able to attend meetings in person, and they have become comfortable with virtual meetings. Be sure your meeting technology is seamless and easy-to-use.

Prioritize communication and engagement. Make sure you can offer communications to clients in the way they prefer. Ask them how often they wish to receive communications. How would they like to receive them? And what do they wish to hear about? Leverage technology to deliver more personalized communications. It’s easy to conceive of topics that would be interesting and relevant to them once you know more about their goals and the ages, challenges and priorities of their families. Satisfying these clients’ needs will involve providing information they want, when they need it.

Offer learning opportunities. Given their propensity for learning, consider offering webinars or similar educational opportunities that fill their financial knowledge gaps. While they take some effort to organize, they may also present additional windows to service these clients.

Assign them a younger advisor. Consider the makeup of your advisory team. I know that my Gen Z children are more comfortable dealing with someone closer to their own demographic and interests, to whom they can more easily relate. They would never dream of dealing with an advisor with whom their parents have a relationship. If you can partner with advisors or other team members at different stages of life, this could broaden the appeal of your business to a wider array of clients and provide future succession opportunities.

Susan Silma is a lawyer and former regulator with a deep understanding of the client perspective. She is passionate about simplifying and humanizing the client experience in financial services, while navigating the complex regulatory environment and promoting compliance.