Older clients have more money and are more likely to seek financial professionals’ help, but this demographic can’t support the insurance and financial planning industry forever. Right now, the majority of financial professionals do not actively engage consumers who are under age 40, which reflects why these consumers have minimal interest in wealth planning assistance.
While wealthy older individuals currently provide the biggest yield for financial professionals, they are reaching retirement and soon will start to spend down their assets, leading to less opportunity for financial professionals. When that occurs, the most successful financial professionals will need to smoothly transition to a younger client base that includes individuals who are young today. Financial professionals who introduce younger consumers to the potential benefits of insurance in financial planning can retain these clients as they build wealth and become more valuable over time.
A lack of connection
Today’s financial professionals are intensely focused on the oldest consumers in the market. Corporate Insight, a research firm dedicated to the financial services industry, conducted a survey of 500 financial professionals and discovered 70 percent do not actively court clients under the age of 40.
It makes sense for producers to target the oldest consumers on the market, as these individuals have a larger pool of assets to manage. According to Census data, people over the age of 65 have a median net worth many times greater than their younger counterparts. The discrepancy makes older individuals the most valuable clients, but the focus on older consumers could come back to bite financial professionals in the future. If the next generation doesn’t learn the value of financial professionals’ aid, they may not seek it out once they have developed wealth of their own.
Social media provides a solution
The key is to engage the younger consumers passively to ensure they pursue a financial professional’s help when they have saved a substantial amount of money. Social media provides an ideal outlet for this type of communication, because it allows a financial professional to build a brand that potential consumers can engage passively. Over time, the financial professional can become a trusted source of financial information, and when the time comes for a younger person to craft a financial plan, they will turn to the voices they have already developed a relationship with online.
Financial Times noted that effective social media content was consistently updated and easy to share. By embracing this technology today, advisors can prepare their business for the future.