According to our latest CATScan Client Survey* analysis, 54% of Australian financial planning clients are aged 60 years and over, and 45% are already retired. They view their adviser favourably and intend to remain with him or her – stable relationships all ’round! However this picture is set to dramatically change over the next 5 years or so, these baby boomer clients will soon have different needs to what they had when they first contacted their adviser.

Superannuation and protection won’t be as high on their agenda as they once were, being replaced by an interest in retirement income, aged care, philanthropy and estate planning for example. Their appetite for actively managed investments may also wane, while their interest (and ability) to continue paying the same level of fees may also be affected.

This scenario presents today’s adviser with a number of significant challenges. First and foremost, how will advisers be able to continue serving the needs of their loyal clients? And, what happens if they can’t? The second major challenge is maintaining revenue. At best revenue is likely to flatline and at worst reduce, in line with the reducing needs of baby boomer clients.

So what do advisers have to do, in order to attract the next generation of clients – the Gen Xers and millennials, about whom they may not know much?

Turning to the first major challenge, assuming the adviser intends to keep advising and not join their clients in retirement, the answer is relatively simple. Start to investigate the types of services your clients will need and decide how they will be catered for. You may actually know most of this already because of your current relationship, built around your fact-find and review processes.

You’ll then be able to decide if you wish to provide these types of services directly through your own practice by upskilling current staff or newly employing the kind of expertise needed. Alternatively, you may choose to establish relationships with external third-party experts, such as estate planning lawyers, to whom you can refer your clients. With either option, hopefully your licensee will be able to provide some direction and support.

It sounds simple but, on checking with our own database it’s clear that there’s work to be done:

  • 34% of current clients don’t have an up-to-date will.
  • ‘Range of services’ is now the third lowest rated of the nine performance areas we ask clients to rate (CATScan Client Survey*).
  • 67% of practice owners have indicated that they don’t intend to expand their current range of services …not too sure how this fits with the aging demographic of their clients?

As to the second major challenge of attracting newer, younger clientele. This is not so easy to achieve, as it will, most likely, have ramifications in virtually every area of the business ranging from the service offer and fee structure through to communication and staffing.

The obvious place to start is with your existing baby boomer clients – they all have children, right? Unfortunately, it’s our experience that these very same children don’t know much, if anything at all, about their parents’ financial adviser. In fact, most of the research we come across suggests that upon the death of one of their parents, the kids intend to move their parents’ assets away from the adviser – their perception (rightly or wrongly) is that this adviser isn’t known to them and probably isn’t a good fit. Seems a tad harsh but, it is the reality for now.

Amongst the more popular ways we’ve seen to attract new, younger clients includes; hiring younger advisers, revamping the product range (adding budgeting, cash flow management and mortgage funding for example), building in educative services, incorporating social media into marketing activities, ensuring communication is mobile enabled, introducing a ‘retainer + one off’ advice fee structure and lowering asset minimum levels.

Irrespective of how you’re currently placed and which direction you eventually choose to take, here are a few actions which I think will be helpful:

  • Conduct an analysis of your current client base – in terms of age, occupation and level of contribution to your business. Ensure your CRM is up-to-date and comprehensive; does it hold details of your client’s children for example? The date the client is planning to retire? Their views on retirement villages and so on?
  • Review your current suite of solutions – are they compatible with the needs of your clients?
  • Identify and attend to any obvious flaws in terms of wills, beneficiary nominations, aged care needs and so on.
  • If you haven’t surveyed your clients recently (say within last 12 or so months), now’s the time. How satisfied are they really with you and your team? (Surveys that are confidential, independent and benchmarkable are to be preferred).
  • Decide what your longer-term (3-5 year) view is, for you and your business. How will your family feel?
  • Talk to peers who have already started to make similar changes. What can you learn from their experiences?
  • Document your plans, which must include the business planning essentials; what, who, how and when.
  • Start working/actioning your plan, reviewing your progress regularly.
  • Don’t hesitate to involve external input and support, to hold you accountable to your objectives.
  • Revisit 1 to 9 at least annually.

Lots to consider I know, but the clock is ticking and your clients aren’t getting any younger!

For your consideration.

Terry Bell