Young High Net Worth Individuals Require a Different Approach

It’s easy to forget about the large population of young people who have over $100,000 of investable assets, but financial professionals who tap into this market can create lasting relationships that provide consistent returns. Young people who have already experienced financial success are particularly likely to use a financial professional, and may be exceptionally loyal to a producer they feel comfortable with. While financial planning may not be a top concern for these clients when they enter an insurance professional’s office, a pointed discussion about the future could result in a relationship that lasts for decades.

An ignored demographic

The millennial generation is loosely defined as being between the ages of 18 and 39, and is often portrayed as underemployed and financially unstable. While it’s true a large portion of millennials lag behind previous generations when it comes to economic development, a recent TD Ameritrade survey noted many millennials have already built substantial wealth, and a large proportion is on the road to further financial success. This group needs the financial guidance that financial professionals can provide, but many producers ignore millennials because they believe this generation lacks the financial acumen to make a significant time investment worthwhile.

In fact, this group can be a boon for financial professionals who want to build their client base today and carry that larger group forward to the future. Crucially, these younger people have a different approach to wealth management than their parents. Unlike older high net worth individuals, millennials want to take a hands-on role in their financial planning. At the same time, investors may need to alter their approach to communication for younger clients.

More likely to seek help

While millennial investors want to participate in the financial planning process, they are also more likely to seek an financial professional’s help. High net worth millennials, which TD Ameritrade defined as those with over $500,000 in investable assets, are more likely to seek the help of an insurance producer to plan for the future than members of Generation X or Baby Boomers.

This may represent a lack of understanding about financial planning among younger people. While they may not know as much as they want to about financial systems and effective estate planning, these people want to participate in their own retirement planning. While there are alarmist statistics that note millennials are the least-insured generation, this should be greeted by financial professionals as an opportunity. While some of the shortfall in millennial insurance results from widespread unemployment and other issues, the high net worth portion of the demographic may simply need a push in the right direction from a trusted source.

The chance to frame a conversation

High net worth millennials may not understand how life insurance can benefit them. After all, they are young, and unlikely to have dependents. By framing a discussion around ways to preserve a personal legacy and direct their savings to the proper parties, however, a producer can appeal to concerns that affect a millennial investor today.

Financial professionals should be cognizant of where that conversation takes place, however. Despite talk about millennials’ love for all things digital, this group seems to value a personal touch. In a survey conducted by Phoenix Marketing International, people under the age of 35 revealed they are actually less comfortable using online services to manage their finances than their older counterparts.

That backs up the idea that these younger individuals desire help when planning their financial future. By offering that help, producers can enter an untapped market that has enormous potential for growth in the decades to come.

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