Why Do We Work With Younger Clients?

7 min read
October 16, 2017

Many advisors who work with Gen X and Gen Y clients have probably been asked: What do you do for younger clients? Maybe, at some point, you’ve even been the one asking the question. There seems to be a prevailing belief that Gen X and Gen Y clients lead uncomplicated financial lives. This belief is not only incorrect - it’s also damaging to the industry.

Obviously, if you’ve worked with Gen X, Gen Y, or even the Millennial generation - you know this is true. In many cases, younger clients need as much if not more financial help. These younger clients face a wide range of financial obstacles, and many of them have the capacity to grow wealth not just in the future but right now.

We put out a media request to our XY Planning Network members to find out why they serve clients in their 20s-40s - and what exactly they do for them.

Their financial lives are constantly changing.

Many individuals in the Gen X, Gen Y, and the Millennial generation are undergoing constant change. More importantly, the life changes they’re experiencing are a big deal. They’re getting married, changing jobs (or even changing careers), buying and selling their homes, having kids, helping aging parents, and more.

Of course, these life changes have a colossal impact on their financial planning journey. It’s also important to note that, as their financial planner, you’re not just guiding them through these transitions. You’re helping them knock out the nitty-gritty details of financial change while also helping them grow their wealth and build a portfolio that continues to grow with them.

“My very first clients were a 25-year-old couple at the time they signed on with me,” Meg Bartelt of Flow Financial Planning, LLC, says. “In the first year and a half they worked with me they quit three jobs and took three new ones. The wife took a couple months off of work intentionally. They each were gifted shares in the wife’s mother’s closely held business. The wife had an accident and went out on short-term disability. They also were working toward buying a house in the San Francisco Bay Area and travelling more.”

The key takeaway here: This all happened in the first year and a half of working together.

As an advisor, you know the work that these life changes entail. 401(k)s are handled during job transfers, cash flow is constantly analyzed and reanalyzed, employee benefits are constantly being reevaluated, stock options are assessed - and most of these tasks only are dealing with their consistent job changes. There’s also working on estate planning, achieving personal financial goals, getting started with investing and account management, educating clients on performing a rollover, and more.

“Ultimately, it’s most important that, by working with me, these clients now better understand how their finances work,” Bartelt says. “They have more clarity on what they value in their lives, and they are more confident that they’re making decisions that align with those values and support the kind of life they want from themselves.”

This couldn’t be more true. Working with younger clients means having a lasting impact and watching them benefit from your guidance not just now, and not just after they retire. Our working relationship with them can completely change their life in a million ways, big and small, every day.

They know the importance of planning ahead, and you have time on your side.

Often the question about what you “do” for younger clients comes from a place of honest misunderstanding. The misunderstanding is rooted in the fact that there’s a long-held belief that working with retirees or pre-retirees is the “real planning” that takes place.

What people don’t realize is that working with younger clients affords you more opportunities to plan for retirement - and to achieve their other financial goals along the way. You have time on your side in these scenarios, and there are more options available to your clients as a result.

Ryan Frailich of Deliberate Finances works with teachers and young families on financial planning and investment management. He says:

“I’m working with a couple now in their late 30’s. Given their employment situations, the retirement account options available to them don’t come near allowing them to save enough to meet their retirement needs. Currently, they’ve been saving a lot in a taxable account, but, that has a lot of disadvantages from a tax standpoint. I am working with one of them on setting up a 401(k) at the small family law practice he works at, and set it up with profit sharing that will allow him to max out the annual limit if he is able to in a given year.

This will also create the ability to contribute to a Roth IRA through a yearly contribution and conversion. The long and short is that it will increase their ability to save in tax-advantaged accounts by more than $40,000 per year. That move alone essentially pays my fee for life!”

I’m always blown away by stories like this. It perfectly captures why we do what we do. This young couple had every intention of saving for retirement. They even had a strategy in place before starting to work with Ryan.

Unfortunately, there’s so much misinformation out there, and so many options available to people that they aren’t even aware of. By working with a financial planner early on they’ll be able to retire comfortably (or more than comfortably, by the sound of it). Their wealth will grow with them, and as a result they’ll value the expertise that their advisor brought to the table even more than if they’d waited until they were five years out from retirement.

They benefit from balancing their career goals and personal priorities - and an advisor can help with that.

We all know that growing wealth and preparing for retirement is important. But what’s even more rewarding about working with Gen X and Gen Y is the ability to use their financial life to help them right now. They can use their finances to achieve personal goals, create a work-life balance, and accomplish what they want to over the course of the long career they have ahead of them.

“Younger clients need just as much, if not more, financial guidance than those entering retirement,” says Ryan McPherson of Intelligent Worth, a fee-only financial planning firm in Atlanta, GA.

And he’s right. Their lives benefit massively from both long-term financial planning that will help them during retirement, but also from in-the-moment financial guidance that can protect them now. Sometimes the guidance we provide is to help them get out of a bad financial decision they’ve already made. But more often than not we have the opportunity to get out in front of potential financial disasters.

“I helped a CrossFit-loving surgeon in her early thirties understand the need for disability insurance,” McPherson says. “While most professionals should at least consider disability insurance, surgeons especially need to have it. Adding potential hand or hand-related injuries from CrossFit into the mix made disability insurance paramount for her.”

This is such a great example of what we do for younger clients. They have such a range of financial needs - and at every turn we need to help them balance their interests with what’s financially best for them. We’re helping them build a financial life that supports their passions - helping them live in an inspired way for much longer than if we’d started working with them as a preretiree.

So, why do we work with younger clients?

The financial planning industry is changing. We’ve already come a long way, but there’s still a long way left to go. Part of this evolution is a renewed focus on providing financial guidance to Gen X and Gen Y. As a founder of XY Planning Network, I obviously value that trend.

It’s important moving forward to continually share our stories. As planners who work with younger generations, we see the huge value we provide. The positive impact we have on the lives of our clients has a ripple effect. We’re benefitting them, but more importantly we’re benefitting their kids. And their future grandkids. We’re helping to build an entire generation of forward thinking, financially savvy individuals in every industry.

If you’re as excited about this profession as I am, you’re probably already sharing your story with anyone who will listen. Find what part of your business you’re passionate about and talk it up. You’re part of this very cool movement that’s changing the way financial planning works, and how it’s perceived. That can feel like a lot of pressure sometimes, especially when we get the why do you do what you do? question. I encourage you to stick with it. Keep going!

We want to know - what do you do for younger clients? Why do you work with them? What motivates you? If you want to share your story or connect with XYPN members who value financial planning for younger generations - get involved in our XYPN Radio VIP Community.


About the Author

Alan Moore, MS, CFP® is the co-founder of the XY Planning Network, a support network for advisors looking to serve next generation clients. He is also the CEO of AdvicePay, the first and only compliant payment processor for financial advisors. He is passionate about helping financial planners start and grow their own fee-only firms to serve Gen X & Gen Y clients largely ignored by traditional firms. Alan has been recognized by Investment News as a top “40 Under 40″ in financial planning, by Wealth Management as one of a “The 10 to Watch in 2015″, and was the first recipient of the NAPFA Young Professional award in 2015. Alan frequently speaks on topics related to technology, marketing, and business coaching, and has been quoted in publications including The Wall Street Journal, Forbes and The New York Times. He is also the host of XYPN Radio, one of the largest podcasts for independent financial advisors. He currently lives in Bozeman, MT so that he can hit the slopes on powder days.

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