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By Brenda Buow
Many investors in their 20s and 30s are reluctant to seek professional financial advice, either feeling they don’t have enough assets to qualify or believing they can do better on their own.
Online brokerages have also aggressively targeted the Generations Y and Z demographics to invest independently using their less expensive online platforms.
But professional advice can be beneficial for many younger Canadian investors. Globe Advisor spoke recently with Jennifer Leathem, a wealth advisor and client relationship manager at Nicola Wealth Management Ltd. in Vancouver, about how Gens Y and Z, their parents – and advisors – can help younger Canadians take advantage of professional financial advice:
What are some common misconceptions younger investors have about getting professional financial advice?
There’s often a misconception of what services a professional advisor provides. The perception is that investing assets and managing a portfolio are the extent of what an advisor does. But advisors and firms specializing in a comprehensive approach and portfolio management are only a segment of what they can provide. Investors in their 20s and 30s often find more value in financial planning and risk management than in asset management.
How can parents help and hinder their children in this demographic who are seeking financial advice?
Recommending your children meet with a professional advisor early in life is the best help parents can give. Parents may have an existing relationship with an advisor they could be introduced to, even if they are not in a position to work together yet. Also, as parents age, there are many family planning benefits that come from an advisor who works with multiple generations, such as succession and estate planning.
The greatest hindrance is, potentially, parents giving their children advice, even if they have been successful financially. Financial success can be emotional, which makes it very personal, and there are many reasons why one strategy will work for one person and not someone else, even within the same family.
For example, in Vancouver, pushing children to purchase real estate (both personal and investment) is common as parents have likely seen significant gains over the past two decades. While real estate can be an excellent investment, it needs to be done in the context of other factors, especially considering it usually includes using leverage.
How can advisors attract and retain this younger demographic?
The best way to attract them is by asking for or accepting personal introductions. As part of their services, advisors should be open to working with the children of existing clients and recommending it as part of an overall family strategy.
Also, don’t rush the process with a new, younger client. Patience is key. Enter the relationship with the intention for it to be long-term. Potentially, this means initially spending time that does not generate income, but in most cases, long-term relationships become great clients for any advisor.
