October 23, 2023 / by Don Connelly / Marketing Yourself / 0 comments
Financial advisors with any ambitions of growing their practices in the next couple of decades can’t ignore the emergence of Gen Z as an economic force. Though the estimated $143 billion in assets held by Gen Z is dwarfed by the trillions held by millennials, Gen Z workers are expected to outearn millennials as soon as 2030. They will be more educated and more ambitious than their generational predecessors, and they will be starving for financial advice.
The challenge for financial advisors is that while even today, the members of Gen Z are looking for financial advice, most prefer to find it through social media, the internet, and their parents or friends, according to the FINRA Investor Education Foundation.
The good news for advisors is that the same study found that 71% of Gen Z investors are receptive to working with financial professionals, counting them among the most trustworthy sources of financial information, second only to their parents.
The critical issue for any financial advisor hoping to attract young clients is whether they are perceived as someone who can be trusted to serve them in the manner they expect.
Read more
How to Educate Clients About the Importance of Investing Beyond Their 401(k)
April 15, 2024 / by Don Connelly / Investing Wisdom / 0 comments
For most people, there’s little to think about when it comes to making contributions to their 401k plans. They enjoy reduced current taxes, deferred taxes on account earnings, and, for most, a matching contribution from their employer. That’s a huge incentive to contribute as much of their earnings as possible—up to $23,000 in 2024, and those over 50 can add $7,000 in annual catch-up contributions.
But is maxing out 401k contributions really the best retirement savings strategy for your clients?
While deferred taxation in a 401k is great for capital accumulation, they will owe ordinary income taxes on their withdrawals, impacting their cash flow in a critical life stage. Many retirees are shocked by the amount of taxes they owe on their retirement income.
Read more
Should FAs Allow Clients’ Political Opinions to Influence Their Investment Decisions?
April 8, 2024 / by Don Connelly / Investing Wisdom, Managing the Relationship / 0 comments
Here we are again—another presidential election year. If it’s like the last couple of elections, financial advisors are sure to see some clients wringing their hands over which candidate will win the White House and how that will impact the financial markets and their investments. At the very least, you’re likely to get an earful of some clients’ political viewpoints—which is fine if they don’t try to correlate them with how they should invest their money.
For decades, investors have tried to find some correlation between elections and investment performance, hoping it will foretell how a particular outcome will impact their portfolio so they can adjust their investment strategy appropriately.
Of course, if you search far enough, you might be able to uncover data that supports such a link. But you’re not going to find any that decisively shows a causal relationship or enough of one to warrant serious consideration for changing investment strategies based on election results. Still, some clients have such strong political views that they see a connection in all aspects of their lives, including how they invest their money.
Read more
Winning Over the Children of Wealthy Clients
January 22, 2024 / by Don Connelly / Managing the Relationship / 0 comments
As evidenced by the great wealth transfer of $30 trillion currently underway from the baby boomers to the next generations, wealth is generational, with far-reaching impacts beyond any one client. For financial advisors, it could be an unprecedented opportunity to grow assets or the greatest threat to their survival.
Why the disparity in outlook? Because some advisors will be better positioned than others to capture the attention and trust of the next generations. Advisors who fail to connect with the children of their baby boomer clients stand a better than even chance they will lose the assets upon their transfer.
The failure to realize that, when working with a client, you are also working with everyone dependent on them leads to advisors losing an average of 70% to 80% of a client’s assets following their death.
Read more
How to Attract Emerging Affluent Gen Z and Young Millennials in their 20s
October 23, 2023 / by Don Connelly / Marketing Yourself / 0 comments
Financial advisors with any ambitions of growing their practices in the next couple of decades can’t ignore the emergence of Gen Z as an economic force. Though the estimated $143 billion in assets held by Gen Z is dwarfed by the trillions held by millennials, Gen Z workers are expected to outearn millennials as soon as 2030. They will be more educated and more ambitious than their generational predecessors, and they will be starving for financial advice.
The challenge for financial advisors is that while even today, the members of Gen Z are looking for financial advice, most prefer to find it through social media, the internet, and their parents or friends, according to the FINRA Investor Education Foundation.
The good news for advisors is that the same study found that 71% of Gen Z investors are receptive to working with financial professionals, counting them among the most trustworthy sources of financial information, second only to their parents.
The critical issue for any financial advisor hoping to attract young clients is whether they are perceived as someone who can be trusted to serve them in the manner they expect.
Read more
How to Bring Back Face-to-Face Meetings with Clients
October 2, 2023 / by Don Connelly / Managing the Relationship / 0 comments
A survey by YCharts in December 2019 found that clients didn’t feel engaged and wanted more personalized communications. We’ve posted several times that, pre- and post-pandemic, the frequency and style of advisors’ communication directly impact client trust and confidence in their advisor, financial plan, and their likelihood of keeping their advisor.
A more recent report, post-pandemic, found that, though virtual meetings had taken hold as a viable form of communication for advisors forced to limit in-person meetings, it’s likely that the decrease in face-to-face contact contributed to client feelings of reduced communication. That’s a direct threat to the strength of the advisor-client relationship.
Read more
How to Turn Data Collection into a Process Your Clients Will Appreciate
May 22, 2023 / by Don Connelly / Managing the Relationship / 0 comments
Financial advisors love data—until it’s time to collect it from a new client. Advisors know that data collection is an essential component of the planning process, without which they can’t get an accurate picture of their client’s current situation. But mining all the critical data needed to connect current circumstances to future aspirations can be tedious—for both advisors and clients.
It can also be a point of tension in a new advisory relationship, as new clients may still be working through trust issues. Advisors must understand this and continue working fervently to earn their client’s trust by expertly shepherding them through the process. While getting the data is important, advisors need to use this moment as another opportunity to engage their clients on a deeper level, focusing as much on the qualitative side as the quantitative side of data collection.
Read more
Overcome the Fee Discussion by Focusing on the Things that Matter to Your Clients
September 27, 2021 / by Don Connelly / Marketing Yourself / 0 comments
Among the many trends affecting the way financial advisors must operate these days, fee compression has been the most impactful. The discussion of fees charged by advisors has moved to the forefront due to the low costs and transparency of digital advice platforms and the highly competitive arena in which they find themselves. As a result, clients are more willing to confront their advisors on the subject of fees and the value they receive in exchange for them, catching many advisors off guard.
Read more
The Slippery Slope from Empathy to Role Reversal, and How to Avoid It
June 28, 2021 / by Don Connelly / Managing the Relationship / 0 comments
Successful financial advisors know that expressing empathy is critical in helping them to connect with clients and solidify their relationships. Clients need to know you understand their circumstances and what they may be going through at any given time. However, empathy taken too far can backfire when advisors find themselves sharing the same emotional distress as their clients, which can threaten their objectivity and compromise sound planning advice.
At the extreme, this can lead to advisors relinquishing control of the relationship to their clients and acquiescing to their desire “to fix the problem” in the short-term at the expense of their long-term plan. This type of role reversal is not uncommon for advisors who become emotionally vested in their clients, wanting to do what they can to ease their pain. Suddenly, the relationship is no longer being guided by rational, objective advice; but rather the behavioral impulses advisors are supposed to prevent, such as selling into a steep market decline, or abandoning the long-term strategy just to alleviate the immediate suffering.
Read more