Using Purposeful Investing to Engage the Next Generation

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Oftentimes the children of your clients won’t stay with you once their parents pass away. But you can change that.

You’ve met your client Jeremy’s son, Tristan. Jeremy is very proud of his family and you also know that some of his fondest moments are of all the time he spends hiking, camping and skiing with his son. His office is filled with pictures of the two of them building memories in the great outdoors.

While Tristan is just a junior in college, you would like to find a way to start getting to know him better now, despite the fact that his father is a good 15 years away from retirement. Tristan has made some of his own money already, both through his summer internship at a sporting goods marketing startup and by serving as a waiter on a restaurant near campus. Some of his friends have already opened IRAs, while his money has been sitting in his student checking account.

Helping your clients have a plan in place that will ensure the successful transition of good habits and wealth to family members starts with meaningful conversations across age groups, and no age is too young to start.

By combining the pursuit of sound investments with a topic that resonates with younger generations’ belief systems, advisers can foster a solid foundation of financial skills.

A Meaningful Connection

In Tristan’s case, you already have some reliable tips on how to connect with him. Knowing that he is an avid outdoorsman like his father, finding investments that align with his interests is a great way to start discussing his financial future. Helping him make decisions that will allow him to have enough expendable income to continue to enjoy his hobbies is key, such as that spring break trip to Vail his friends won’t stop talking about. Sharing that he can invest in funds that are aligned with his love of nature is something he may not be aware of, and allows you to show your value in the relationship early on.

By focusing on investing money in ways that influence environmental, social or governance (ESG) factors, younger generations have the opportunity to connect their beliefs with their financial savvy. With 84 percent of millennial investors interested in some type of sustainable investing, according to the Morgan Stanley Institute for Sustainable Investing (February 2015), purpose investing can be a key entry point to discussing wealth transfer.

Further, the research shows that younger investors are not only more likely to integrate sustainability into their consumer behavior, but they are also more likely to exit investments if they have objections to a company’s activities.

By combining the pursuit of competitive risk-adjusted returns with a topic that resonates with younger generations’ belief systems, you can help create a solid foundation of financial skills that can be critical to establishing good money habits for life. Fostering these connections well before a life event also helps you develop a multi-generational relationship with families. This is critical for planners given that 66 percent of children move to a new financial planner following the death of a parent.

And at the very least, you can find a new ski buddy.

Editor’s Note: A version of this blog was published on the Janus Henderson Blog and is available here.

Matt Sommer

Matt Sommer is vice president and leads the Defined Contribution and Wealth Advisor Services team at Janus. In this role, he provides advice and consultation to financial advisers surrounding some of today’s most complex retirement issues. 


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