None of us are getting any younger. Existing clients are ageing and the new ones seem younger. Rob St George finds out how to deal with the generation gap.
It is a universal truth that no-one in business gets any younger – even financial advisers. You’re getting older, but more and more of your clients seem to be younger and younger. You may need a new generation of clients and staff.
"It’s a topical issue," says Darren Lloyd Thomas, Managing Director of Thomas and Thomas in Pembrokeshire. "The challenge is that the clients are either getting younger, or some of them die, and your staff are getting younger. And of course, we have to do business differently because of the technological advances."
Indeed, younger clients may want to be communicated with differently from older clients: by email, rather than over lunch at the golf club perhaps, with video clips, podcasts and infographics rather than long articles.
As Andrew Pople, from Map Financial Planning in Liphook, Hants, points out, at the same time, something else is happening. "As you progress through your career, inevitably your client base will get older. We all tend to attract people to us of a similar age and backgrounds and we share a psychological bond. But you need common ground."
The Global Impact Investing Network (GIIN) considers impact investments to be those "made into companies, organisations, and funds with the intention to generate social and environmental impact alongside a financial return". Trends such as climate change, resource constraints, ageing demographics, and population growth are having tremendous global transformational effects on human life and the wider biosphere. For more information on impact investing, see "Impact investing: doing well, doing good" by Nick Anderson and Hamish Chamberlayne, co-managers of Henderson’s global equity sustainable investment strategy.
Source: The Deloitte Millennial Survey 2017. Apprehensive millennials: seeking stability and opportunities in an uncertain world, 31 Jan 2017
This can be harder to establish as the age gap widens. Bringing in younger people to the business can help. It can also provide options for you as you approach retirement age. While some one-man and one-woman advisers will sell their businesses, as 60 becomes the new 40 and other mathematical miracles occur, more may decide to go on working, but perhaps not as much. And a continuing business helps to provide an income.
In fact, as Lee Travis, Head of Professional Development, Personal Finance Society observes, "It’s important for advisers who are in business for the long term to de-risk their businesses by engaging with younger generations of their clients, and embracing technology. There are also some real opportunities to recruit young talent through initiatives such as apprenticeships, for which the Personal Finance Society is lending support."
Pople also observes that engaging younger staff has enabled him to devote more time to concentrating on higher net worth clients. He has taken on two apprentices through the government’s apprenticeship scheme, so that he can hand over matters like mortgages and mortgage planning and administration to them. He hopes his apprentices will stay and start advising clients, and provides office time and space for exam study.
Lloyd Thomas has taken on younger staff, most recently a 26-year-old who is training to come up the business. But here again, he has noticed a real difference.
"The younger generation coming into our business are not necessarily driven by returns in the way that Thatcher’s children were," he says. “They are less interested in money and more interested in whether they are engaged in and happy with their work. They want a better work/life balance. And our younger clients are driving investment in ethical portfolios and impact investing (see table). They want to know much more about where we are invested and are much more concerned about issues like climate change." He adds that impact investing is something that younger clients are particularly interested in.
Indeed, this difference in emphasis is reflected in a report written for Henderson by Dr Paul Redmond, Director of Student Life at the University of Manchester on Generation Y, the generation born between 1980 and 1999. Redmond argues that Generation Y is motivated by civic and global values and works "with" organisations, rather than "for" them.
At work, Generation Y is motivated primarily by opportunities for career development and personal growth rather than purely by pay. Interestingly, despite their reliance on technology and connectivity, Redmond found they would still choose to have a face to face meeting with a skilled financial adviser rather than relying on emails or phone calls.
"It is important that this generation understands that it will inherit the earth. There will be a massive change in the way we do business. If we want to attract young people, we need to have young, dynamic businesses."