Understanding Generational Differences Will Build And Preserve Your Practice

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Understanding Generational Differences Will Build And Preserve Your Practice

May 31, 2016

by Lori Dorsey

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

The communication gaps between generations are warning signs of a deeper chasm that divides your clients and their children. Here are some strategies to ensure that your services will survive the generational transfer of assets.

To understand the generational gap, consider the Baby Boomer father describing an early cellphone to his Millennial son.

“Back then, phones came with bulk and substance – nothing like your sleek smartphones of today,” the father explains. “They were built thick and brick-like with keys as big as Chiclets.”

The son furrows his brow, soaks in his father’s description, Googles an image of an “old cellphone” and within moments shares a basic understanding with his father.

“I get it, Dad, but…”

The father leans in, “Yes, son.”

The son pauses, furrows his brow tighter and politely asks, “What the heck is a Chiclet?”

Sharing information from one generation to another can make for challenging discussions. Just one word out of kilter, and you lose your audience. Use a phrase that means something to you but nothing to someone born in a different time, and you watch a face glaze over with confusion.

Now try explaining something as personal and important as financial plan options to not one, not two, not even three, but to as many as five generations.

It takes a savvy advisor with a working knowledge of generational differences to earn new clients and maintain the trust of existing ones. Understanding generational tendencies can rate as high in importance as your best pitch or best-selling services.

Priority #1 is to understand who’s who: Traditionalists were born before 1946; Baby Boomers were born between 1946 and 1964; Generation X was born between 1965 and 1979; Millennials were born between 1980 and 1995; and, the newest generation, Generation Edge was born after 1995.

Generational Differences

Each generation comes wired with its own ideas, behavior patterns, work ethics and values. All of these are based on events and conditions that influenced their formative years, roughly during their teens. During this period, generations come to terms with the world around them. The events, conditions, role models and pop culture of the time make a huge impact on how they view things like money, wealth, risk and politics while creating generational traits that are carried into adulthood.

As a financial advisor, if you shrug off generational differences, you risk wrecking the profitability of your business. This is crucial to comprehend since clients will transfer $59 trillion in wealth from one generation to the next. In the meantime, nine out of 10 prospective heirs will ditch their parents’ financial advisors for new ones. A full third of financial advisors will retire in the next 10 years, leaving clients and prospects to search for new advisors who understand their unique and sometimes idiosyncratic financial needs, many of which are based on generational profiles.

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