Journal of Financial Planning: August 2011
Amy Florian is CEO of Corgenius, a company specializing in training financial professionals how to interact with grieving and emotional clients. Her website is www.corgenius.com.
A representative from a large broker-dealer recently told me they lose almost 90 percent of Generation X money. Basically, as soon as kids get their inheritance, they disappear.
This is not uncommon. Industry-wide, 95 percent of adult children are not retained by financial professionals who served their parents.1 Yet it is disconcerting, especially in light of the Boston College study that concluded a minimum of $41 trillion and potentially as much as $136 trillion will change generational hands by 2052.2 Let’s look at a couple of factors affecting this cash hemorrhage, and then examine one way to better serve Gen X clients and keep their business.
First, Gen Xers’ sense of loyalty is different from their elders. In past generations, employees and companies were mutually loyal and people spent entire careers in one place. In a rural town, a farmer was known as a “John Deere man” or a “Harvestore guy.” Loyalty like that rarely exists anymore. Gen X and Y grew up in a fast-paced, transient society and expect to switch brands, companies, homes, and careers whenever something better comes along. They go where their personal needs are met.
Second, Merrill Lynch reported that 42 percent of affluent investors3 say the top factor giving them confidence in their financial plan is their relationship with their adviser. Advisor Impact studied client attitudes and found that the most engaged clients rated the personal relationship with their adviser as “very important” or “critically important.”4
In other words, we assume the path to engaged clients is paved with new and better products or services. But clients themselves report that products and services are basic expectations. The path to engagement is paved with personal relationships. Clients, especially younger clients who don’t feel tied by loyalty, go where their personal needs are met.
So how do you grow your business in a field where every adviser tries to meet a client’s personal needs? One way is to serve clients in a way other financial advisers don’t or can’t, because they don’t know any better. You can learn what to say and do to support your clients through grief, transition, and loss. This is particularly important for Gen X, because they face so many transitions.
First of all, there is no immunity from death. I was widowed at the age of 25, seven months after our son was born. Would you know what to say in this situation? Or would you be like everyone else, stumbling over “I’m so sorry” and “You have my sympathy,” and then simply switching the subject?
Add to death-related grief the numbers of Gen Xers coping with divorce. Then add other painful events, such as a favorite car being totaled; treasured possessions being lost, broken, or stolen; a loved one developing dementia and slowly slipping away; or the loss of physical ability to continue doing things at the same intensity. We grieve as we make a memory out of what can no longer be, learn to live without the person, thing, or activity we don’t want to live without, and move into a future that will be different than we thought or hoped it would be.
Interestingly, even positive transitions trigger grief. Marriage is exciting and hopeful, yet we grieve over the advantages and freedom of single life that must be left behind. Everyone expects new parents to be happy, yet sometimes they miss being able to go to the store without carrying a minor U-haul or see a movie without getting a babysitter.
In fact, every transition generates a mix of gratitude and sadness. When a client’s grandfather dies, everyone tells her to be grateful Grandpa lived a good long life and is no longer suffering. She is indeed grateful, and yet she loved him and there is a void in her life where he used to be.
Gen Xers experiencing loss and transition are looking for professionals who understand their grief so they can give them their business. If they find someone, they will stay for life.
Allow me to illustrate an example and offer suggestions on how you can make a striking difference.
I recently overheard one person congratulate another on her promotion. She hesitated and then said, “Thanks. I’m trying to remember it’s a good thing. It’s just that we have to move from New Jersey. We LOVE living here and had hoped to stay for a very long time. Now we have to say good-bye.” Her colleague responded, “Oh, but the job will be worth it. I bet you’ll love it; you’ll love your new home, you’ll make great friends, and you’ll wonder why you ever thought you didn’t want to leave.”
How would you acknowledge her grief? Instead of trying to cheer her up, you can say, “It’s normal to have mixed emotions about a transition like this. I can hear how hard it will be for you to leave, because even as you move to something good you have to leave a lot behind. Would you like to tell me some things you will really miss?” Then listen attentively and ask further questions based on what she says.
Follow up with: “Some people find it helpful to tangibly honor their memories and bring meaningful things along. For instance, you could take pictures of yourselves in cherished locations and make them into a booklet. You could take videos of each room in your home and take little snips of the carpet. Maybe you could set up a return visit now, so you can look forward to seeing friends again and eating in your favorite restaurant. Do things like that make sense to you, or what else seems right?”
When you are ready to end the conversation, you can say, “Moving from a place you love is never easy. Be patient with yourself. Others will try to cheer you up and keep you looking on the bright side, but allow yourself to feel sad, too. You have a right to that, and it honors your attachment to this place. Let yourself feel whatever you feel, instead of letting anyone tell you what you should feel.”
Now imagine what this young woman thinks about you. She knows she encountered a wise person who understands what she is going through, isn’t afraid of the negative emotions that come with it, won’t try to talk her out of what she feels, and helps her deal with it constructively. Do you think she might come to you for other advice as well? Do you think she might trust you with her money? And do you think she might tell her friends and family about you?
The point is, your Gen X clients will not be loyal to you because you have better products or services. They certainly won’t stay just because you held investments for their parents. But if you surprise them by knowing what to say, what to do, and how to support them through the transitions of their lives, they will stay with you now and into the future, and they will tell their friends and associates about you, too. You not only serve them well, you simultaneously build your business. It’s a win-win proposition.
Endnotes
- Field, Anne. 2006. “Creepy Conversations.” Registered Rep. (October).
- Havens, John J., and Paul G. Schervish. 2003. “Why the $41 Trillion Wealth Transfer Is Still Valid.” Journal of Gift Planning 7, 1 (First Quarter).
- Merrill Lynch Affluent Insights Quarterly. Press release: October 28, 2010.
- Littlechild, Julie. 2008. Economics of Loyalty: Anatomy of the Referral. Advisor Impact.