Specialists in a younger clientele explain how 'new year new me' mentality is driving younger clients to them, what all advisors can do to serve this growth market now
There’s a trend in new years’ resolutions towards financial wellness. Where once the new year just came with commitments to eat well and exercise more, now an increasing number of young people are declaring ‘new year, new me’ and committing to spend less, save more, and start investing. For two advisors specializing in a young clientele, they are seeing a particular commitment to those positive changes this year. The challenge for them is harnessing that commitment into the right habits before that discipline wanes.
Tara Lalehparvar and Curtis Holt-Robinson are the co-owners of Skyward Financial, an advisory team specializing in Gen Z and young millennial clients. They explained how they normally approach this time of year with clients and how they turn this burst of energy into sustainable habits. They outlined why other advisors may want to look out for young clients seeking to improve themselves at this time of year and why they’ve seen a particularly committed burst of energy this year.
“Young clients are very excited, very eager, almost overly optimistic around gym, diet, money, school, everything,” Holt-Robinson says. “I’m glad people feel that way but sometimes it can be a little unrealistic.”
Holt-Robinson and Lalehparvar say that while they’ll often see people commit to sustainable strategies like budgeting and investing a fixed amount each month, there are also sometimes expectations that changes can be made rapidly and with single actions. A client may want to make one big lump-sum investment, or may come with expectations of rapid returns. It’s there where they seek to temper expectations and ensure a commitment to financial betterment isn’t too onerous.
“The fact that it sometimes becomes unsustainable as the year goes on is actually a lot more psychological than anything else,” Lalehparvar says. “People need to learn not to be a tyrant about their own habits, because anybody would get crushed under that kind of pressure. So by the end of January, people get crushed and they revert to old habits.”
The Skyward team approaches their clients’ resolutions with a mixture of encouragement and temperance. They try to channel the goals that people set for themselves into sustainable pathways, while emphasizing which expectations are realistic and which expectations aren’t.
Coming off a bull market, as well as a run up in the price of bitcoin, can be challenging for advisors in terms of that expectation-setting. Working with young clients who may not have experienced a bear market, or might be more susceptible to social-media driven FOMO, there is a concern that they might expect last year’s returns to repeat themselves. In the face of those expectations, Holt-Robinson and Lalehparvar say that advisors need to focus on financial literacy education. The better educated a client is the more realistic their expectations should be.
Advisors working with these young energetic clients are fundamentally having to play both cheerleader and coach. They need to encourage the energy while ensuring expectations stay realistic. In their own practice, Holt-Robinson and Lalehparvar use this time of year for new client outreach, expecting to appear right at the moment when a young person is thinking about their long-term financial plans and goals.
This is a moment when other advisors, who don’t specialize in young clients, may want to reach out to a younger client base as well. Holt-Robinson and Lalehparvar explain that even though these clients may not represent much in the way of account size now, accessing this market at a crucial time can help get advisors on the ground floor of the intergenerational wealth transfer. They stress that educational efforts around tools like RRSPs, TFSAs, and the much-misunderstood FHSA can function as entry points for advisors into this market. As they do so, Holt-Robinson and Lalehparvar stress the importance of relating to young clients on their level and demonstrating an understanding of the lives they lead.
“For advisors who typically work with an older generation, you have to find a way to relate and understand the lives of younger generations,” Lalehparvar says. “It’s not the same as when your sixty-, seventy-, or eighty-year-old clients were in their 20s. It’s very different. What realistic expectations are today vs what they were back then are very different. You have to familiarize yourself with what it’s like to be a mid to late 20s working as a young professional and the financial realities of that.”
