Can you build a better business on insights from different generations?  Miriam DeLacy talks to Corey Wastle CFP® and Tracey Sofra CFP® about delivering quality advice to a diverse client base and the strategies and services they’ve developed to meet their needs.

In recent years there has been an explosion of research, analysis and commentary on how each generation is different from the next. Whether it’s career and relationships, or shopping and entertainment, you don’t have to look far to find a report or editorial on how a new generation are thinking and behaving in contrast to their parents and grandparents.

In the financial planning profession, the need to act on these perceived differences is an equally hot topic. Not only is this essential to the ongoing viability of financial planning as wealth is transferred from parents to children, it’s also an opportunity to deliver the benefits of financial advice to a generation that may be facing a level of economic disadvantage we haven’t seen for decades.

Even before the COVID-19 pandemic, concerns about the financial struggles of young people in Australia were coming to the fore. In their 2019 report Generation gap: ensuring a fair go for younger Australians, the Grattan Institute suggested young Australians are in danger of being the first generation in memory to have lower living standards than their parents’ generation.

Money attitudes

With financial pressure on every generation expected to rise as the global economic impact of the COVID-19 crisis hits in the months and years to come, engaging more Australians with advice that can secure their future is more important than ever. So what can financial planning professionals do to tailor their advice strategies and services to the priorities and preferences of clients in different age groups? Understanding their different attitudes towards money can be a good starting point.

For a financial planner running a relatively small business, Tracey Sofra CFP®, has a wide range of clients, demographically-speaking. “Many of my clients at SofCorp Wealth are in that 60+ age bracket, with their retirement years already well underway,” says Tracey. “Some have been with me for as long as 28 years. Others are in their 20s, including children of older clients I remember from when they were in kindergarten.”

“One of them is running his own coffee shop now and seeking advice for his business as well as his personal finances. It’s amazing to see how far they’ve already come and take my own pride in their achievements. So much so that I almost feel like their grandmother,” she adds.

Engaging with clients from each generation has shown Tracey some fundamental differences in their outlook and expectations about money. “For my older clients it’s all about working hard and being frugal,” she says. “Their generation went through hard times in their years growing up after the Second World War. What they heard from their parents was ‘put your money away and secure your future.’ So their goals in the lead up to retirement were very much about paying their mortgage and setting their kids up for a secure future”

Tracey’s observations are backed up by worldwide research conducted by US funds manager Legg Mason. According to their Global Investment Survey 2018 of more than 16,000 investors, 66% of millennials choose funds according to ESG considerations compared with 32% of baby boomers.

Tracey has found these different expectations demand different ways of building trust with younger clients. “Older clients have generally been happy to take my expertise and advice at face value,” she says. “They don’t question much of what I recommend. Their kids, on the other hand, are more informed. Before they make an appointment, you can be sure they’ve stalked you online.”

“Young clients also have a greater tendency to challenge me,” she adds. “Personally I find that very encouraging because it shows they want to be empowered and take charge of things.”

Advice needs

Corey Wastle CFP^®, founder of Verse Wealth, has experienced less of a marked difference in attitudes and expectation across his diverse client base. “In my view, you can overestimate the impact of the generation gap on what clients look for from financial advice,” he says. “No matter what age they are or where they are on life’s journey, they want an engaging and relevant advice experience and they want things to be easy.”

However, Corey agrees with Tracey that younger clients are generally looking for a more collaborative, empowering experience with financial advice. “One distinct variance I have seen is how much younger clients want access to more information and place a higher value on education during the advice process,” he says. “They want the tools and knowledge to do more for themselves.”

Not only has this shaped new ways of engaging with clients for Corey and the Verse Wealth team, it also translates to broad changes in the life cycle for clients from different generations. “Younger clients have that drive to take control off the back of our advice,” says Corey. “They also have some very clear goals they want to achieve such as buying a home, or getting spending under control or selling a business. We’ve seen that they generally need a relatively short engagement with financial planning, often dipping in and out of their relationship with us over an extended period.”

“Older clients are usually more focused on their remaining working life and the retirement years that come after,” Corey adds. “They’re looking for a more sustained engagement that can establish the best outcomes for their long-term security. That will often break down into goals like reducing their working hours and putting more money into paying off their mortgage and into super. Plus, the time that remains for them to build wealth is shorter. The stakes are higher so they look to us for greater guidance on their financial planning journey.”

Services and strategies

To address these different preferences across their client base, Verse Wealth offer a project service as well as the more traditional ‘journey’ service. “The project offering is just what it sounds like,” says Corey. “It’s for clients who come to us looking to achieve a very specific outcome. This type of engagement will typically last for 90-100 days and there is a one-off fee for the service. Almost all the clients who take this up are under 35 years old.”

“We introduced this after realising our retention for younger clients was fairly low,” he adds. “They make a lot of progress in a short time. Once they feel like they’ve taken the big, important steps in getting their finances organised for a particular goal, they’re quite happy to go it alone once they’re well on their way to what they want to achieve.”

 The journey service, in comparison, is more holistic, taking a broader look at each client’s values, challenges and goals. “The journey service kicks off with a one-hour ‘My Best Life’ session. This is where we define values, goals and challenges and forms the basis for our initial strategy and advice. Then we continue to meet with them every 90 days through the year to check in on progress and discuss any concerns. That first session is one we run with them annually to reset or refresh the strategy and our advice.”

Corey finds the majority of clients in their 40s, 50s and beyond will naturally have a preference for the journey service. But whether a client is taking up the project or journey service, Corey places high importance on working with them on their cash flow management. He firmly believes that all clients need to get their cash flow on a firm footing, regardless of their age and income. “Cash flow management is the foundation of everyone’s financial life or strategy,” says Corey. “Whether you’re 25, 45 or 65 you need consistent and predictable cash flow to make your whole financial strategy flow.”

Coaching in cash flow management is one of the three financial advice fundamentals Corey seeks to deliver to all clients.  “Every client needs a strategy based on their values, goals and challenges plus a combination of coaching and asset management,” he says. “The balance of these two elements can certainly change as a client ages and moves through the life stages. Younger people generally have fewer assets and take more coaching to start with. But as they develop more discipline and positive money behaviours over time, their need for coaching diminishes and their wealth grows. Then it’s asset management that becomes a bigger part of the mix.”

Technology for all

Corey has long relied on many different forms of technology to support his client relationships. He’s found that each client will readily engage with technology, regardless of age, providing you make the right choices in your solutions. “All clients want things to be simple and easy which is why everyone can benefit from your use of technology to engage them in the advice process,” says Corey. “Simplicity is empowering and complexity is disempowering. So we’ve always been pretty obsessive about using tools that deliver a simple user experience. We use online bookings, video meetings via Zoom and video messaging with Loom, and all these tools are about making communication easier and simpler for our clients.”

Tracey is also an enthusiastic adopter of technology as a means to engage with existing clients and build her profile. “I’ve been using Zoom meetings for a while to look after my clients across Australia,” she says. “I work with a husband and wife living and working in different locations and it couldn’t be easier with the access we now have to video meetings.”

Weekly appearances on Facebook Live are something else Tracey has introduced to stay in front of clients during the COVID-19 crisis. While this is a fairly recent addition to Tracey’s online presence, she is very active and successful in using all social media channels for outreach to new clients. “I acquired a new client from Phoenix Arizona through Facebook last year,” she says. “She runs an online business teaching photography and reached out to me on Messenger. When she said where she was from I thought it was a hoax. But then she actually called me up and now I’m working with her and her girlfriend who lives in Washington DC.”

While Tracey has generally found younger clients are the ones eager to work with their financial planner at a distance, the COVID-19 pandemic is making tools like Zoom essential for clients of all ages. Corey has had the same experience, “The proportion using Zoom meetings had been around 80% for younger clients and 60% for older clients,” he says. “Now its 100% for everybody because that’s our new way of life.”

A universal need for quality advice

Taking a segmented approach, according to each client’s age, can be helpful in designing services and strategies that will best meet their needs. But, ultimately, financial advice should seek to deliver the high-quality, consistent experience all clients are looking for. “We have a strong financial planning framework and methodology that we apply in the service of all our clients,” says Corey. “Each of them want and deserve value, knowledge, regular contact and expert support for their financial goals. And that’s what we’re always committed to delivering.”

“Clients want a planner who is truly on their side and here to serve them,” says Tracey. “Establishing a relationship with every client takes a level of trust and respect that you must earn. Being a respectful person and listening to what clients need is fundamental to delivering the best outcome for every client, no matter what is going on in their life.”