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How Advisors Can Lure the XY Generation

By Alex Padalka November 19, 2018

To bring on Generation X and Y clients, financial advisors will have to rethink how they do business, according to a recent report.

The average age of a wealth management client is now around 64, so most advice practices want to lure a younger generation of clients, according to a report from strategy and marketing consultancy Simon-Kucher & Partners.

However, the traditional asset-based approach to fees would exclude many younger clients, the firm says.

Taking on new clients at a loss with the hope of “the imminent passing of a near relative,” meanwhile, isn’t a strategy that would appeal to most advisors, according to the report.

Additionally, traditional wealth managers face rising competition from low-cost financial services providers, according to the report. Yet while some clients can be served by a digitally-generated financial plan, a basket of low-cost ETFs and a hotline, many younger clients nonetheless need more complex offerings, the company says.

The solution, according to Simon-Kucher, is “to fundamentally re-think, re-build and re-price their wealth proposition.”

Advisors who are succeeding in attracting a younger wealthy clientele are staying away from financial jargon and using intuitive language instead, according to the report.

Transparency is also key: 61% of advisors on the XY Planning Network, an organization founded in 2014 by Michael Kitces and Alan Moore dedicated to serving Generation X and Y clients, prominently display their prices on their websites, Simon-Kucher says.

Finally, advisors will need to offer more options for how their younger clients can pay for their services, according to the report. Some advisors are now using a combination of up to six different fee metrics, including project-based and subscription-based fees, in place of the standard asset-based fee model, Simon-Kucher says.