The issue of how to serve wealthy Millennials is high on the wealth management industry's agenda, as advisors consider the unique preferences of – and how to capture business from – this investor segment.

One big area of focus has been around client acquisition and retention as there exists what has been described by Family Office Exchange as a misconception that many Millennial family clients plan to let go of their parents’ advisors as soon as they get the chance.

However, according to a new white paper by FOX, Millennial – or Gen Y – clients are actually “eager” to work with experienced advisors who already know their family.

“If you can establish relationships early with your young adult clients, demonstrate value by helping them to achieve their goals, and if you can manage to give them the client experience they want, you’ll see those numbers flipped in your favor for client retention,” FOX’s Amy Hart Clyne, executive director, Knowledge Center, told Family Wealth Report.

“On the other hand, there are major players who think that it should be business as usual with Millennials,” Clyne said. “They think that this generation isn’t all that different than the ones that came before them. Our research shows that while their essential needs are not all that different, Millennials’ expectations for service delivery are different in some subtle but very important ways. So, it’s not the ‘what,’ it’s the ‘how’ that’s different. That’s what the recommendations in our report address.”

For its Engaging the Client of the Future paper, FOX interviewed 30 Millennial family clients, 13 industry experts and spoke with members of the FOX Thought Leaders Council and the FOX MFO Council. The organization has analyzed five generational themes to help advisors develop a deeper understanding of the needs of their Millennial family clients, as well as the factors shaping these.

First, advisors must appreciate the way that Millennials value relationships. As a 24-year-old male interviewee put it (as summarized in the report): “When you’re accustomed to turning to close relatives for financial advice and education, relying on outside advice can be very uncomfortable.”

Being able to connect with clients on a more personal level by serving as a coach or mentor, for example, is therefore paramount, FOX said. Additionally, because Millennials tend to be “natural networkers,” providing them with thoughtful networking opportunities will likely be well received.

Meanwhile, Clyne noted that some advisors expressed concern, understandably, that young adult clients wouldn’t be very open to working with older individuals. However, it emerged that Millennials don't regard age as a barrier to relationship-building, although they do worry about the prospect of their advisors retiring.

“These advisors feared they’d have a hard time connecting on a personal level due to a generation gap,” Clyne said. “The Millennials in our study told us that age is not an issue. They value the expertise and they value long-term relationships where the advisor knows the family history and understands the dynamics and complexities...Forming multi-generational teams helps advisors connect with younger clients, fosters opportunities for internal knowledge sharing and training, and helps with succession.”

The second theme in the paper reflects the notion that Millennials “seek authenticity, demand transparency, and aspire to be true to their personal values in everything they do.” With philanthropy, for example, they want to feel more connected with their endeavors, rather than simply donating to large organizations that support multiple causes.

Some of the recommendations made by FOX on this section include helping clients identify and document their goals and values; explaining how various strategies are linked to these; and communicating firm-wide philanthropic interests and charitable endeavors.

The third theme is around communication and technology. FOX noted that while much noise has been made about how Millennials prefer communicating in “real time,” they actually highly value personal meetings because this is an important relationship-building component.

“People tend to think that the fact that Millennials are hyper-connected means they prefer to engage online,” Clyne said. “But when it comes to working with their most trusted advisors, face-to-face is an essential part of that.”

What did transpire from the research however is that many Millennials would welcome receiving text alerts as a reminder for when they need to act on or review something.

“The text request is really just symptomatic of the information overload these young adults are suffering,” Clyne said. “They want to be texted with an alert to check their email because they can’t stay on top of their inboxes.”

However, this can be challenging for a few reasons – primarily regulatory restrictions. Advisors should therefore establish protocols for addressing individual communication preferences, while also educating clients on what is allowed, what isn't, and why.

Following on from this, the paper considered how Millennials are very entrepreneurially minded, but that demand for related support services is expected to outstrip supply as this cohort starts businesses at “a record pace.”

FOX’s recommendations around these points focused on embracing an entrepreneurial culture, talking to clients about the risks associated with their businesses and having the resources to fulfill any related needs. But perhaps most crucially, clients will only listen and be proactive when they themselves feel respected and trusted, FOX said.

Similarly, the paper notes that Millennials often “know what they don’t know,” but can in some cases be afraid to ask. They are keen learners, though - advisors “just need to figure out how to do it [teach them].”

For example, while running online webinars may seem like an effective way to engage with and educate clients, the advantage of personal meetings is that they require more commitment.

In the words of one Millennial female: “I sign up for a web conference, and then something else comes up. I prefer an actual in-person meeting with breakfast or cocktails. If there’s networking attached to it, I’m much more likely to attend.”

Conclusion

FOX said its research suggests that often what Millennials request so too do clients in other age brackets such as Baby Boomers and Generation X. “They just haven't thought to ask for it.”

While the overarching value proposition is therefore “essentially the same as it is for their parents and was for their grandparents,” being aware of the subtleties and factors affecting these will no doubt give advisors an advantage when it comes to capturing business from this client segment.

“As a result of this research, FOX has come to call ‘The Millennials, ‘The Accelerators,’” Clyne said. “The Millennials act as accelerators, quickly adapting to and often driving technological innovation and change, they identify ways to improve traditional services and long-standing processes.”