Luck is what happens when preparation meets opportunity.

—Seneca

Seneca reminds us that we make our own luck—and today’s financial services industry offers many favorable conditions to create positive outcomes for our businesses and our clients’ lives. Two demographics in particular—investors under 45 and women—are quickly becoming our country’s fastest wealth creators while simultaneously poised to receive the bulk of a $40 trillion wealth transfer that actually ends up in the hands of inheritors.¹

Headlines and platitudes everywhere acknowledge the importance of these two groups, but studies continue to show that systematic, successful engagement and high satisfaction among them remains rare.

Investors under 40 and women continually report the highest levels of dissatisfaction and trust in their experience with financial services.

It is puzzling why more advisors have not yet adapted their business models to more thoughtfully serve these clients. It is especially puzzling when you consider how challenged the typical advisory firm is to achieve its growth goals. The 2015 Investment News Compensation and Staffing Study² confirmed that this is a great business to be in with the industry overall doubling in size in the past five years.

It also found that advisory firms plan to keep this momentum with the majority aiming to grow their firm’s assets under management by at least 10 percent from new business development each year.

While we are optimistic about an advisor’s ability to continue to experience this kind of positive momentum and grow, their strategies need to adapt. It used to be that a 10 percent growth rate was easy to achieve by simply receiving the referrals of satisfied existing clients and relying on the personal networks of their founders. The industry, however, is changing. Many potential clients already have an advisor and are satisfied with the services they receive. Traditional brokerage firms have successfully converted their services to planning and wealth management. Many local markets are saturated with well-known advisors. The founders of advisory firms, who used to develop most of the new business, are also finding that they have tapped out the potential of their networks. The next generation of advisors has often received little or no training in how to approach new clients.

This is why we believe that it is important for every firm to change its approach to new clients and particularly find a way to reach clients they may not have approached before—younger people and women.

Table 3.1 that follows gives us a detailed look at the growth rates and some challenges by firm type. Solo firms grew by 22.4 percent compared to ensembles at 14.6 percent, enterprise ensembles at 10.8 percent, and super ensembles at 8.5 percent.

There’s an anomaly in the 2015 data set that shows the fastest growth rate being achieved by the solo firms. We talked to the study’s author, Philip Palaveev, who suggested that solo firms may be getting a boost as the denominator of the calculation (current AUM) favors smaller firms. The addition of $10 million in new AUM may represent 10 percent growth versus a large $1 billion firm that adds the same AUM growth adds only 1 percent growth.

But it is the larger ensemble and super ensemble firms that have and will continue to have many more advantages than smaller ones.

These firms are more productive and more profitable than their smaller counterparts. Larger firms are able to attract larger and higher quality client relationships. They attract the best talent by offering access to work with the best clients, more development opportunities, and higher salaries.

The size of the ensemble and super ensemble firms also increases their reputation and prominence in the marketplace. In fact, investors in the study describe these firms as safer or more prestigious.

With all these tailwinds to give their strategy a lift, it’s important that these firms do not get complacent. One of the best suggestions we have to prevent complacency is for firms to commit not to growth, but to managed growth.

We define managed growth as:

• Being committed to your culture and your clients.
• Knowing that growth at all costs is not success. Growth isn’t good if you lose your soul or control of your business in the process.
• Staying true to your value proposition, business development activities, client experience, and brand—do not dilute them.
• Managing risk. It means we continue to discern the quality of the clients, employees, and partners we associate with, recognizing that one bad apple can ruin the tree.
• Never acquiescing leadership, and inspiring it at every level.

The firms that are most at risk to missing their growth objectives seem to be the ones without a disciplined commitment to managed growth.

For example, in some of the larger firms we work with we see a growing distance between the firm’s clients and the firms’ management team. This comes to light in examples like these:

• As firms grow and hire more relationship managers, the CEO and founding partners tend to spend more time managing and less time in client meetings. When the leadership team is removed from the client experience, yet is still responsible for the key decisions that affect clients, we start to see that the decisions they make may not be the right ones or the most relevant ones.
• Another issue we see as firms grow larger is that they become very good at client retention, but they do not invest as much in developing a business development muscle. These firms may have hired many relationship managers to manage existing clients but fail to transfer their knowledge of how to develop business to the next generation.

So how can we continue to professionally manage and institutionalize our businesses without losing touch with our clients and finding new ways to delight them with the kind of personalized service experiences today’s clients expect?

Get to Know Your Ideal Client, Again

This is where understanding demographics and the changing face of wealth can play a big role. Today, many firms are too locked in to an “ideal client” type. These firms see customization and any process exceptions as an expensive endeavor, and the client asking for the accommodation, as an outlier. This can leave many clients feeling dissatisfied with a service experience that feels less than personal and unique. Silicon Valley has changed the client expectations for good with the promise of frictionless, innovative, and smart, client experiences. This kind of service experience has become long established in so many aspects of our clients’ lives and the starting point for how they will define good service with today’s advisory businesses.

After all, our clients are people who regularly experience extraordinary service in so many aspects of their lives, from hailing a ride to conducting online banking or personalizing purchases. Our clients expect the same consumer-grade experiences when they interact with their financial services provider. But what we find are too many who are tired, frustrated, and struggle to understand why our industry can’t seem to catch up.

Financial advisory firms cannot expect to have highly satisfied and engaged clients if the service experience working with their firm does not resemble the easy and personal experiences that are so common in our everyday lives.

This is a blind spot many firms have when assessing their ability to grow. This is particularly acute when we recognize that the expectations of the next generation are unforgiving of a service experience that is anything less than simple, smooth, and fun. Emphasizing and designing a client experience that satisfies the high demands of the next generation client is the fuel an advisor’s business needs to gain these clients and remain a lasting and profitable business.

It’s an easy argument to make, but a difficult proposition for most firms to undertake. To modernize the client experience, firms need to invest in digitizing key activities, training staff to understand the needs of each individual client and topics like unconscious bias, and modernizing office and meeting space. These are expensive and time-consuming tasks.

Many of the advisors we talk to see the need, but the payoff feels uncertain. They ask questions like, “What if I alienate my core, older clientele? How can I justify redesigning my business for clients who are not yet profitable to serve even in my current business model?”

Financial technology firms sense this hesitancy and are capitalizing on it, and they have an advantage. Without a bias toward a certain clientele or way of doing business, and without legacy processes and systems to maintain, smaller or new firms can design a business and operate with a clean slate.

Without the constraints of managing an existing business, they can identify and develop a value proposition around percolating needs—the outliers or growing and new client requests—which many legacy and larger businesses have a tendency to overlook or minimize their importance as a driver of client satisfaction.

Examples of meeting these pent-up demands from potential clients may be finding a cost-effective or low-cost investing platform with instant communications for price-sensitive younger investors, or meeting their need for stability more than performance and who desire more sustainable and responsible investments in their portfolios. For female executives, it could be finding a way to deliver on the promise of a simplified service experience.

For example, a Pershing study, The 30% Solution, Growing Your Business by Winning and Keeping Women Advisors,³ underscores this. It found that as Boomers retire and spend down their assets, advisors must look to the next generation of clients to take their place.

The study showed that established firms seem to gravitate to investors who have already “arrived.” Many women lead businesses that are smaller and newer than those owned by their male counterparts and have a knack for building successful business relationships with clients who may start off with lower asset levels but have high future potential.

These women-led smaller firms who joined the wealth management profession later, often found it easier to serve the up-and-coming client, for example: other women, younger investors, and LGBT (lesbian, gay, bisexual, transgender).

Seek First to Understand

Another reason why we see larger, established firms struggle to retain their existing clients may be a more subtle one. It’s widely noted that the majority of investors cite “not feeling understood”⁴ as a top reason to sever their relationship with their advisor. These investors wish for more and frequent communication and to feel appreciated.

In our work studying the generations of investors, we have found that feeling understood is deeper than the need for more communications. In relationships that are lasting and successful, there is a consistent feeling of goodwill between both parties. Investors tend to say things like, “My advisor really gets me,” “I just like him,” “I trust her,” and “I feel safe.”

The feeling is elusive. It’s like charisma—hard to describe, but you know it when you see it. We call it a likability quotient and we believe it is the basis for trust, for referrals, for smooth client interactions, and for more understanding clients when things go wrong. It’s critical for relationships to last.

One of the best ways to develop your likability quotient is to find and focus on the areas of common ground that you share with a client. Try to identify and amplify:

• Common interests
• Lifestyle experiences and preferences
• Similar family dynamics
• Professional and life experiences
• Generational points of view

When you share common ground with your clients, you have an almost-immediate advantage in serving them—and winning their hearts and minds.

When you are meeting with a new prospect or an extended family member of your primary client, these common-ground moments may not always be clear or available, but understanding and empathy are.

One way to create this kind of connection and demonstrate empathy is to try to imagine the world through another’s eyes, to see where the other person is coming from. Trying to do this cold is difficult, but there are tendencies that individuals from a particular generation, gender, or lifestyle demographic may exhibit that can provide you with a starting point.

It takes a long time to get to know someone and the most intimate moments are discovered slowly and organically—and over a long period of time. While your newer relationships are developing, consider leveraging some of the well-documented tendencies among how different groups relate to the world and their financial advisor to build critical rapport and trust.

Our primary client relationships are likely as cemented as they are because we have found and shared many of these common-ground experiences. While not a substitute, letting generational and gender insights fill the void while natural connections are forming can increase your likability quotient and open many doors to the connections and experiences that become the solid foundation that lasting and deep relationships need.

It sounds easy and many advisors do not see this as an area of development. Yet, we so often hear the spouses or children of the primary client feel that an advisor’s interest in them is self-interested or disingenuous. They may feel that the advisor is spending time with them to check the box or as a Plan B—a time in the future when the primary client is no longer around.

If the spouses and children of your clients are important to you, it has to be something that they feel. They need to know that you care to know them and are inspired to build that relationship in spite of any preexisting ones. Maya Angelou is credited with saying, “. . . People won’t remember what you said or did; they will remember how you made them feel.” How can you apply this sentiment to your business? How are you making each one of your clients feel the depth of your concern and care? Feel confident that you have their best interests in mind? Feel that what you’re building is not a next-generation retention strategy, but a meaningful relationship?

One way to assess how you’re doing on this front is to quietly reflect on and examine your own biases. It takes a great deal of self-awareness to challenge your thinking and it’s worth it to pause to regularly ask yourself questions like:

• How were your perceptions of the world formed?
• Could these old beliefs and experiences be influencing and informing how you see other people today? Especially people who are different from you, by gender, generation, and how they think?
• What assumptions might you be making about your clients’ and prospects’:
  • Needs, preferences, and desires?
  • Desired experience working with you?
  • Views on money?

Self-reflection is one thing. Try to go even further and ask your clients, prospects, and employees for feedback if you really want to add a rich layer of context and reflection. It’s also a really wonderful way to demonstrate your open-mindedness, curiosity, and willingness to learn.

These kinds of behaviors can show how committed you are to designing a service experience with the other person in mind. It shows them that you care deeply enough to invest in that relationship as much as you may have with the traditional head of household or client. It shows the deep empathy and caring that is the glue to long-term, successful relationships.

If these more emotional arguments do not persuade you to invest more time and energy in designing the optimal client experience, then do it because it’s one of your most positive paths for personal growth.

We believe that for the firms that are not as committed to reflecting on their client journey—crafting the opportunities to “surprise and delight” and remove the spots in which clients get stuck, for those advisors who wish to keep doing what’s always worked, growth will become even more elusive.

Whereas reflecting and thoughtfully devising a client experience to serve the needs of all clients, particularly those traditionally ignored—women and investors under 40—such reflection has the potential to catapult an advisory business.

We understand that the task to understand and offer an exceptional and highly personalized client experience comes to us at a time when our entire industry is at an inflection point and there’s already a lot of work to be done to retool an advisory business.

There are structural changes taking place and advisory firms need to respond to a myriad of changes. These include finding the right ways to consume so many technological and regulatory changes into their businesses. Facing unpredictable and volatile markets and trying to identify, take on board, and retain a top-performing team are just a few.

In spite of the effort it will take—and perhaps without an immediate payoff—we are committed to the idea that investing in the client experience is one of our industry’s best opportunities to continue sustainable growth and retain our important client relationships.

The first step is to evolve our view of a target client from a monolithic persona that exists on a worksheet to a unique individual whose service expectations are informed by their life experiences, gender, generation, and other critical aspects of their demographic.

For decades, our profession has created a service experience that is based on a singular set of assumptions that went something like this: A man and woman meet, they get married, have children, build a life together, and retire happily ever after.

The man was most often viewed as the head of household and the key decision maker. Individuals who mirrored this profile became the target client that most of our industry’s legacy financial advisory businesses became so successful building their business around.

Today, however, families around the globe find themselves following a different calling as it relates to defining love and a meaningful life. The new definitions of family and our ideas for spending our lives also call for a new approach to financial planning and strategies to relate to and serve this new family dynamic. It’s the new modern family.

As an industry, we are late to recognize how much the face of wealth has changed—it seemed to change right under us. Now, we need to remedy this and begin creating authentic connections that deliver the unique and personalized experience today’s consumers want.

It’s not only the profile of today’s family that is changing; their life goals and priorities are also moving targets. The traditional markers of adulthood like marriage and home buying are delayed in favor of taking time to find oneself or just a desire to forgo retirement altogether and rewire, continuing to find meaningful ways to contribute and build a life.

Today, we know our clients and their needs are changing, but we have a limited understanding of what we need to do differently to serve them well. Our lack of understanding has us chasing stereotypes to try to evolve our businesses and remain relevant.

The new modern family is a whole new way of looking at family. We may see our new ideal client is a woman head of household who feels dismissed by her current advisor. Or a member of Generation Y or Z, the cadre of young people who represent the most educated and ethnically diverse generation our country has ever seen.⁵

And it turns out that even the clients who we have traditionally served and think we know well may have unmet needs. For example, many pre-retirees’ and retirees’ most overlooked planning needs are their emotional ones.

This is the time in life when many of our clients begin to contemplate some of their most difficult and permanent decisions, including health challenges, legacy, and life transition, and advisors need to tap into these needs to serve their client holistically.

In all of these examples, our client experience needs to be regularly contemplated, fluid, and thoughtfully mapped to plan for the unique needs each client may have. Our recommendations should consider the generational and gender experiences and tendencies and should be highly personal and unique. Our client’s experience with us should be an experience that only your firm and team can offer—if the client relationship is one that is being built to last.

It’s not an easy task for today’s advisory businesses to structure a service model and solution set that is relevant to up to five generations and all of these client types at one time. It may seem impossible to consider the preferences of each unique client and deliver on their rising expectations.

Having a background in the tendencies and preferences among the generations and gender can help, and it is something to keep in mind as you interact with each group. We have seen many times, when advisors bring the smallest amounts of this kind of awareness into their interactions, they are able to improve their ability to quickly relate to their clients—the new and the longstanding ones.

As our client rosters less and less resemble the clients who are familiar to us, having awareness and unbiased points of connection are the keys to the longevity of an advisor’s business and to ensure that all of an advisor’s client relationships are nurtured and thrive.

Once you have reconsidered your ideal client profile, the next step is to consider their preferences and the moments in life that shaped their lens of the world. The remaining chapters in this part will help you learn about and understand the drivers of each generation and consider the additional complexity and preferences of genders, certain niche groups, ethnicities, and other characteristics that are the client and people we value, and a critical source of our future growth.