3 significant factors to consider when seeking younger clients as an IFA

As an independent adviser, you might be focusing on the classic demographics for potential clientele. These may include those who are:

  • On the runway to retirement
  • In the top earning bracket
  • Looking to invest significant wealth, either inherited or earned
  • Holding a diverse array of assets, including property, shares, a substantial pension, and some cash wealth.

While it makes sense to pursue clients with enough wealth to gain significant value from your services, and of course those entering crucial wealth accumulation stages, you could ask yourself: “Should I be pursuing younger clients, and if so, why?”

While every adviser has their strengths, it could be true that IFAs are missing out on a different kind of clientele by only seeking over-40s.

Indeed, young people could be the ones in greatest need of advice, and many have significant wealth from sources including:

  • Entering high-level employment at a young age
  • Starting their own business
  • Investing
  • Inheritance
  • Trusts.

What’s more, these individuals might encounter different types of risk than your older clients.

If you’re wondering whether taking on young clients is right for you, read on. Here are three significant things to consider when welcoming young clients into your firm.

1. The Financial Conduct Authority has found under-40s are more prone to taking ill-advised investment risks

You may already be aware of the huge array of social media investors, and other online advice, that exist today.

While your older clients might not be “plugged in” enough to be at great risk of taking investment advice from unqualified influencers, younger clients are more likely to follow their recommendations, the Financial Conduct Authority (FCA) reports.

The FCA’s research found that:

  • 76% of under-40s who invest in high-risk assets, including cryptocurrency, say they are driven by competition with friends, family, and their own past investments
  • More than half (58%) of under-40s say social media and news hype lies behind their investment decisions.

So, as an adviser, your services could be well placed when it comes to helping under-40s make informed, evidence-led investing decisions.

Social media has its part to play in spreading misinformation, including promising certain returns (an obvious red flag to any professional). Your expertise could be the antidote young people need.

On the other hand, while many young people may need professional advice, they may not have enough accumulated wealth to make their custom worthwhile for your firm.

As with every client, assessing a person’s unique circumstances is crucial – just remember not to brush off a potential client purely on the basis of their age.

2. The current “great wealth transfer” could lead to a swathe of wealthy yet unadvised young people

According to data published by MoneyAge, the older generations are catching on to the benefits of “giving while living”. You might talk about this concept often with your clients when advising them on estate planning matters.

The study shows over-55s gifted £2.1 billion to the younger generations between January 2020 and December 2022. The report suggests that, with the average age of inheritance sitting at 47 in the UK, parents and grandparents want to help their children thrive earlier in life.

This phenomenon is often referred to as the “great wealth transfer”.

So, if you are approached by a young person who has recently been either gifted a large sum, or inherited it after a family death, this individual could be a potential client in grave need of advice. They could also be the recipient of a trust.

Regardless of the source of wealth, a sudden influx of capital can be overwhelming, especially for those still figuring out their life goals. These individuals could even be the children of existing clients – and it may even be constructive to meet with them as a family in this instance.

As an adviser, you could help the recipient of a large financial gift by:

  • Asking them about their short- and long-term life goals
  • Helping them create an investment portfolio in line with these targets
  • Discussing pension contribution opportunities
  • Assisting them in putting the essential protection in place.

Remember: when talking to younger clients, it’s important to adjust your expectations. They may not have a clear idea of when they want to retire, where they’d like to live, or their long-term career goals.

Initially, it could be worth focusing on the essential building blocks for any financial plan: long-term wealth growth, protection, and risk management.

3. Taking on young clients could produce a decades-long relationship

Have you ever met a new client and thought to yourself: “I wish I’d met you 10 years ago”?

As you may be well aware, often clients will approach financial advisers when they’re already retired, past their most lucrative wealth accumulation stage, or have already lost significant funds to ill-advised decisions.

Alternatively, taking on younger clients could help you garner decades-long relationships with clients who may gain huge long-term value from the partnership.

While your relationship may not be as profitable for you from the get-go (especially if your young clients are not as wealthy as your older ones), helping a younger person grow their wealth over decades could produce incredible results.

Especially if you are a young adviser in the initial few years of your career, forming these relationships could be hugely beneficial down the line – for both parties.

Joining a network of IFAs could help you match your firm’s goals with your clientele

Ultimately, the decision to take on younger clients is yours to make.

If your target demographic has always been over-50s, for example, you might feel like you’re stepping into unchartered territory when exploring the option of onboarding younger clients.

This is where being part of an IFA network comes in handy. Here at Corbel Partners, we can help you:

  • Work out your target demographic, and market your business to gain the appropriate leads
  • Stay educated on the financial issues affecting different age groups
  • Discuss your concerns both with our company leaders, and with fellow IFAs
  • Remain confident in your plans to build the firm you have always dreamed of.

Want to expand your audience and welcome wealthy young clients into your client bank?

Do you wish you were part of a wider community of IFAs that can strengthen all areas of your practice?

Email hello@corbelpartners.co.uk or call 01925 637891.

Please note

This blog is for general information only and does not constitute advice.

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