Advising Millennials needs a business reset

Founder of Audere Coaching & Consulting, Stewart Bell, said that advisers typically consider evolving their practices and targeting niche markets when they realise that their clients are ageing, retiring, and could inevitably pass away in the future.

“It wasn't that long ago when we had many businesses that had the bell curve problem, where the majority of its clients are typically within 15 years either way of the adviser's age,” Mr Bell told ifa ahead of the ifa Future Forum 2022, which will be held in November in Sydney.

“Advisers reach a point where they realise that their clients are ageing and there's not a lot of fresh blood coming through. That's when advisers wonder if their business is still going to be around in five or 10 years’ time when their clients enter that retirement or drawdown phase, or inevitably pass away.”

However, Mr Bell warned that while many advisers have attempted to capitalise on the significant intergenerational wealth transfer that is in the offing, they have not necessarily succeeded.

“The truth is, you can count the number of practices that have targeted their clients' children and made it work,” Mr Bell observed.

“It fails more times than it works because if you're going to target that second-year generation, you typically need to have other advisers in the practice. You need to be comfortable that you're going to do business differently.”

This is because Millennials (those aged between 26 and 41) have different requirements compared to their parents, and as such, need advice in different areas.

Moreover, not only do their expectations around the use of technology differ from the older generation, they also expect to be communicated with differently.

As such, Mr Bell said intergenerational wealth advice requires a practice owner to recruit multiple advisers who can service different markets in their own right and appeal to a broader client base.

“Instead of shifting your entire business model when you try to target a different generation, if you just do what you’ve always done, you’ll find that it typically won’t work,” Mr Bell warned.

While stopping short of ruling out a sole practitioner’s ability to expand into different markets and evolve their practice, he said they have to be more selective about their growth journey to remain sustainable.

Alternatively, once they have established their business and generated sufficient revenue to continue operating, they must consider recruiting their first employee to oversee operational duties.

“Otherwise, they may find they've got all these new clients coming in and they've got all this servicing to do in the back end,” Mr Bell said.

“Unless the practice can recruit at least one employee, they could top out their capacity at 50 or 60 clients, and it could happen overnight. You may be fine one minute but feel stressed and out of control the next.”

Mr Bell will present a masterclass at the ifa Future Forum this year, exploring how advisers can assess if expanding into new markets is worth their investment, how they can expand and evolve their advice model to seek intergenerational opportunities, and what strategies they can implement to ensure return on investment.

Before expanding into new target markets, he said, advisers must research the demographics to understand their goals, needs, aspirations, fears, and interests, and their appetite for seeking financial advice. 

He added that advisers must be able to articulate how the target market wants to use its wealth to meet their lifestyle goals.

“When you can do this well enough that the prospective client says that's exactly what they are looking for, that's when you're at a point where you can work with a new market,” Mr Bell said.

“Don't try to expand or change your business by targeting a market you know nothing about or have no access to.”

To hear more from Stewart Bell on how to effectively grow and evolve your advice model, and adopt a goals-based approach to advice, come along to the ifa Future Forum 2022.

It will be held on 16 November at Montage in Sydney.

Click here to register for free and make sure you don’t miss out!

For more information, including agenda and speakers, click here.