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How to Surf the Retiring Boomer Wave

By Chris Latham October 10, 2014

Many of the tens of millions of soon-to-retire baby boomers fall below advisors’ ideal wealth levels. But collectively they control vast assets — by some estimates, boomers hold as much as $6.5 trillion in IRAs and will transfer up to $30 billion to their heirs over the next few decades. Experts say it would be a mistake to let asset minimums keep advisors from cashing in on this generational wave, many of whom have never hired a financial advisor and don’t know where to look.

The way to make the most of these prospects is to set parameters, suggests Russell Francis of Portland Fixed Income Specialists. “I’ve thought about this a lot,” says the Beaverton, Ore., advisor, who charges a flat retainer. “It’s not easy.” For example, don’t fight to change the mind of someone who insists she doesn’t need an advisor, he says. She’ll only fight back. And avoid prospects who can barely afford your services, since there’s a good chance one day they’ll be unable to pay. Francis guesses that leaves at most 10% of baby boomers for advisors to pursue. Still, a May report from the U.S. Census tallies over 75 million boomers, while a 2013 report from Cerulli Associates counts over 300,000 advisors. So even at 10% of boomers, there would be about 25 suitable prospects for every advisor.

Advisors would love to land nothing but millionaires, but that’s unrealistic, warns Joel Johnson of Johnson Brunetti. The Wethersfield, Conn., firm oversees $300 million. Midsize advisors looking to capture the boomer market should be less focused on a prospect’s current investable assets than their long-term potential as Social Security and 401(k) accounts become accessible, he says. It’s most cost-effective when the firm has junior advisors to handle basic financial planning with these clients, at least until they start taking withdrawals. Johnson Brunetti hired someone six months ago from Merrill Lynch’s training program, and last year brought on a person who was new to investments but has great people skills and an insurance background.

A prospect’s social network and family situation can change the equation, according to David Richmond of Richmond Brothers in Jackson, Mich., which has AUM of $270 million. A 60-year-old who falls a little short of the practice’s asset minimum might have wealthy friends hungry for financial advice. Another prospect might have very elderly parents and be on the verge of inheriting wealth. Richmond Brothers’ average client has $750,000 to $1 million in assets, but someone with $250,000 could make the cut, says Richmond.

Seen and Heard

Campaigns to draw in skeptical or unsophisticated boomers often are time-consuming; but careful targeting methods can increase an advisor’s success rate, according to Pete Lang. He runs Lang Capital, which manages $175 million from offices in Charlotte and Hilton Head, S.C. The vast majority of Lang’s clients are baby boomers. He likes catching prospects’ attention by conducting workshops on topics such as tax deferrals, Roth IRA conversions and allocating assets to mitigate risk after retirement. “We do bring in some high-net-worth prospects based on those efforts,” he says. “But many advisors just want to lay back and use referrals.”

Jim Brogan
Even prospects who have saved enough for a comfortable retirement probably worry about what a market downturn or two could do to their assets, says advisor Jim Brogan. His firm, Brogan Financial, manages $140 million in Knoxville, Tenn. That’s why Brogan loves teaching seminars at local colleges and why he hosts a radio show about personal finance. In addition to educating boomer listeners, these formats let them get to know him. These prospects are more likely to trust him, he says, and therefore more inclined to seek him out.

Maintaining that trust once they meet requires that he be honest about his limitations. “It’s okay to tell them that you don’t know the answer to a question but that you will move Heaven and Earth to get that answer,” Brogan says. “People want to hear that kind of a message."