Advisor Insights

A Checklist for Developing a NextGen Offering

Helen Modly, CFP, CPWA

By Helen Modly, CFP, CPWA, and Tiffiny Dimel, CRP

Expanding traditional wealth management services to attract younger generations is a hot topic today. Identifying what they want, how to reach them, how to service them, and even how to text them is proving to be a challenge for firms built on serving baby boomers with a traditional assets under management model. They are early accumulators, so most don't have the investable assets necessary to meet many firms' thresholds. How can advisors develop a new business model to serve this demographic?

Identify the Ideal Client and What Services You Want to Offer
Think about the aspects of serving your current clients that you enjoy the most. Involve your staff, especially your younger advisors, and solicit their opinions and preferences about the type of clients they want to work with and services they want to provide. My advisory team began by offering complimentary financial planning services to the adult children of our boomer clients. This allowed our advisors to learn what needs existed, what younger investors valued from our process, and what competing offerings these investors had explored.

Determine the Business Model
Post-baby boomer generations are still building their wealth and retirement savings, with much of their net worth locked away from the AUM model in assets such as 401(k) plans, stock options, or homes. Advisors are unable to manage directly the majority of these clients' assets; however, wealth accumulators typically have strong cash flow and are willing pay for good advice.

There are multiple ways to charge clients in this demographic. One method is an ongoing subscription model, where clients are charged a flat monthly fee to their credit card, similar to their Netflix subscription. A real benefit of flat fees is that they can eliminate potential conflicts of interest present under the AUM model. For example, it may be more appropriate for a young client to roll an existing 401(k) account into a new employer's 401(k) plan rather than out to an IRA for an advisor to manage.

Another option is a combination of an advisory fee on assets--even those not directly managed, such as a 401(k) plan--with a separate, one-time fee for financial planning services. Some firms offer a discounted AUM fee for investment advice on nonmanaged accounts and a flat fee for ongoing financial planning. Such models may facilitate the eventual graduation of these younger clients into your standard AUM offering.

Charging hourly fees is the simplest route of all and may prove useful for exploring and evaluating your new offering. Your advisors can learn about your new client base's needs and wants before committing additional resources to serving them. One-time engagements, for instance, can be an opportunity to learn about a client, begin to build a relationship, and place your firm top of mind if a wealth transfer does occur.

Pricing Your Services
Determining an appropriate pricing model for younger demographic clients can include a multitude of factors. You may, for example, consider charging a percentage of gross income, a percentage of net worth, or just a flat fee based on your estimation of the complexity of the client's needs. One common method is to charge 1% of income plus 0.50% of a client's net worth. Establish a minimum fee and evaluate it on a regular basis.

Attracting Your New Demographic
Marketing styles and activities will likely differ between your existing client base and your new target market. An older, traditional prospect may rely heavily on a peer referral to you and might want to talk on the phone and meet in person before making a decision. By contrast, millennials seem practically allergic to answering their phones, even calls from their friends and family! Instead, they may explore your firm and your advisors online and might prefer to learn about your services via a video or webinar before emailing you for an appointment.

Create In-house Processes for the New Offering
Fee schedules outside of the regular AUM model will require additional internal processes to support them. This may include setting up the capability to accept regular ACH or even credit card payments for clients who pay fees from their cash flow. A number of businesses, such as BluePay and AdvicePay, have sprung up in recent years to help facilitate charging clients on a regular basis. Look for solutions that integrate with your current technology stack to streamline the process as much as possible.

We recommend creating a new business line in your CRM system for tracking various metrics, such as close rate, number of clients, revenue, and time your advisors spend serving them. If your advisors are managing accounts, you will need to make thoughtful decisions regarding how to invest smaller, regular deposits while minimizing trading fees. Efficient automation and integration likely will be key to profitability.

Determine Who Is Going to Develop This Line of Business and Monitor Its Progress
Most established advisors have a full plate maintaining their pipeline and serving their existing client base, so it's difficult to ask them to pursue a new line of business. However, an associate advisor or paraplanner can be a perfect match for the task of developing a younger client base. Not only may younger financial planners enjoy working with people from their own generation (much the same as with baby boomers), but doing so represents a great opportunity for an associate advisor to develop as a practitioner in a low-risk environment.

Once the right staff has been identified, you need to dedicate some amount of their time to pursuing clients for this business model. They will also need to generate content to reach your market online, attend events not related to your main line of business, and develop deliverables that may require frequent revision as you fine tune your service.

Creating and nurturing an offering for the next generation is both exciting and daunting, but it doesn't have to be painful. Most firms will find themselves in this new space out of necessity as their client base ages and depletes their wealth. However, careful and deliberate implementation of a thoughtful plan to reach and serve wealth accumulators will set you apart from the one-size-fits-all approach of other competitors. The result should be a more robust firm able to handle changes in the marketplace across multiple generations of advisors and clients.

Helen Modly, CFP, CPWA, is a wealth advisor with Buckingham Strategic Wealth, a fee-only registered investment advisor. The opinions in this article are the author’s own and may not reflect the opinions of Buckingham Strategic Wealth or The author may be reached at