How Can You Provide Financial Planning for Younger Clients?

6 min read
June 17, 2015

When you talk to people at financial planning conferences about working with clients in their 20s, 30s, and 40s -- or when others in the industry learn that XY Planning Network is dedicated to helping people under 50 -- they always ask the same question.

What financial planning do you actually do?

They're incredulous that a growing group of forward-thinking advisors would branch out to spend their time and effort on younger clients. But there's actually so much that clients need during this period of their lives. It just doesn't normally fit in the traditional mold of old-school financial planning.

[Tweet "Gen Y and Gen X have a lot of financial planning needs. They just break the old-school mold"]

Racking Up Milestones and Hitting Big Goals in Your 20s and 30s

Let's use a personal story from our co-founder, Alan Moore, to help illustrate what kind of financial planning you can offer to younger clients -- and how you can benefit both them and your own business.

Since 2010, Alan graduated college and got married in Georgia. He then moved to South Dakota and bought an investment property. Shortly after, he sold that property and moved again for new job in Wisconsin. Then his wife went back to grad school -- and meanwhile, he started his RIA and another business (then sold the other business). From Wisconsin the next move was to Bozeman, Montana, where his family grew by one with the addition of a new baby. And the next business was XY Planning Network.

All of this took place within the last 3 and 1/2 years. That's a lot of milestones hit, goals reached, and a ton of opportunities for a financial advisor to provide guidance and advice. What kind of financial planning could you have provided with Alan during this period? How much work would you have done if he were your client to help him through all these changes, transitions, and complex situations that directly impacted his finances?

Like Alan, younger clients experience many life transitions and lots of change. There's a lot going on financially between buying and selling real estate, relocating, changing jobs, going back to school, starting (and selling) businesses, growing families, and more. So yes, there's plenty of financial planning for younger clients to be done.

But financial advisors can't simply offer the same exact service that makes older clients happy. You'll need to do a little changing yourself to best serve Gen X and Gen Y.

What We Don't Do When Providing Financial Planning for Younger Clients

Start by understanding what's not involved with financial planning for younger clients. A lot of what financial advisors currently do for older clients simply isn't applicable to a younger demographic.

One of the biggies that's now off the table: we don't do much retirement planning. There are no high level, complex Monte Carlo simulations to determine if they can stop working at 65 without outliving their money. There's not much income distribution planning, either.

When you're younger, it's simply not necessary. We're not looking at Social Security predictions, or complex estate tax planning needs. Part of this is because younger generations don't share the same, traditional views of retirement as members of older generations.

Younger clients tend to not to follow the narrative of, graduate college and start a career at 22, then work nonstop in that same career until 65 before hanging it all up and never working again. Gen X and Gen Y want to enjoy their career as they do work they feel passionately about, and not be forced to retire.

Work is not always a dirty word, and younger clients may not want to slam on the brakes of their career at a specific age in their 60s and never earn an income again. (Not to mention, running a Monte Carlo simulation for someone in their 30s is just not helpful. There are too many variables!)

What Financial Planning for Younger Clients Really Looks Like

So what's a little different when working with younger clients? It starts with basic financial skills and education.

Within younger generations, there are countless really smart people making good money -- and they simply don't have the financial education they need to make the most of what they earn. You can make such a positive impact in the lives of your clients by teaching them how to budget, showing them the benefits of contributing more to a 401(k), and helping them create an action plan for future goals.

Financial planning for younger clients often focuses on budgeting and cash flow management. Helping clients understand where their money is coming from and where it's going, teaching them about understanding the ins and outs of their income and expenses -- that's huge! If you can help them maximize their cash flow, you've empowered them to live their great life in which they feel happy, satisfied, and fulfilled.

Another big element when you work with members of younger generations: debt management. It's important to help clients look at student loans, mortgages, car payments, credit card debt, and more.

Continue to Add Value Around Education and Career Decisions

Student loans in particular are a big deal. Many people under 50 have loans, and "student loan analysis" is a bit like the young person's Social Security analysis. Clients need help with this, because they don't understand how to pay their loans back (or the best way to do so). They're not aware of all their options, and may find it challenging to juggle all the different moving parts on their own.

And clients want to make the most of the education that landed them with those loans. Career management is a big are of opportunity for advisors to help with. Younger client don't want to work in a job they hate for the rest of their lives. You can help them transition to new jobs, teach them the importance of salary negotiations (and how to do it), guide them through the decision on whether or not to go back to school, and more.

In the same area of career management, financial advisors can help younger clients make the most of company benefits. Maximizing those is important for Gen X and Gen Y -- and you could save your young clients hundreds if not thousands of dollars per year by helping them work through their options and setting up what they need.

Or you might find yourself working with more entrepreneurial Gen X and Gen Yers who want to start businesses -- or at least, side hustles. Members of younger generations want to own their schedules or work for themselves. Financial advisors can add major value to entrepreneurs starting or selling businesses, and the interest in side hustles means planners can focus on the whole cash flow picture -- the income side of things can be included in the conversation, instead of putting the focus solely on expenses.

Don't Worry: Traditional Planning Elements Are Still in Play

Yes, there are still elements of traditional planning that younger clients want and need. Members of Gen X and Gen Y are busy buying homes, getting married (or divorced), having babies, changing careers, starting a business, taking a year to travel the world -- these are all things, major things, happening to clients in their 20s, 30s, and 40s. People need support to make the right financial moves during this time.

Each of these transitions require a considerable amount of financial planning. And if they already have a financial plan, that means major adjustments to what was there before. Even during periods of calm between life changes and advancements, younger clients need help with traditional planning areas like tax needs analysis, estate planning, insurance needs.

Needless to say, those in the industry serving Gen X and Gen Y are doing a LOT of financial planning for younger clients! You can provide a variety of services and immense value for those in their 20s, 30s, and 40s. But before you do, understand that younger individuals aren't looking for financial planning lite.

They don't need or want your current planning process designed for older clients, where you simply remove a few things from the service menu. Younger clients need and want comprehensive financial planning, and that does require a complete redesign of your process from the ground up. This is not a slight modification. It's a new system designed specifically for this demographic with new areas of focus.

The next time you -- or someone else! -- wonders what how much financial planning for younger clients is possible, know that there's a whole world of services that Gen X and Gen Y both need and want. Clients change lives very quickly during these age ranges, so there's a wealth of opportunity to provide in-demand services and incorporate younger clients as profitable ones into your firm.

Alan Moore

About the Author

Alan Moore is the CEO and Co-Founder of XY Planning Network—a support ecosystem dedicated to helping fee-for-service advisors start, run, and grow their own financial planning firms and serve the clients they want. His favorite part about his job is dreaming about possibilities for what's next, knowing his stellar team will either tell him no or Get Sh*t Done to make it happen.

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