Tom Henske, ChFC, CLU, CLTC, CFS, CFP, CTS, is the founder of Henske Advisors, which was acquired by National Financial Partners. He is now one of seven partners nationwide for Lenox Advisors, a wholly owned subsidiary of NFP, and lives in Westport, Ct. His focus in financial planning is asset and risk management and raising money-smart kids. He recently wrote a book entitled, “From Me to We,” in which he details the practice management success of Lenox. He is a 10-year member of the Million Dollar Round Table (MDRT) and has two Court of the Table qualifications.
Randy L. Scritchfield, CFP, LUTCF, is president of Montgomery Financial Group in Damascus, Md. A 28-year MDRT member with three Court of the Table and 11 Top of the Table qualifications, he serves as the Divisional Vice President of Top of the Table. Scritchfield is a past member of the MDRT Foundation Board of Trustees, and is a Diamond Knight of the Foundation. He balances industry leadership with community involvement, currently serving as immediate past chairman of the BlackRock Center for the Arts.
Derek T. Stephens is a financial representative for Northwestern Mutual. His office is in St. Louis, and he specializes in asset and income protection and comprehensive retirement plans, including wealth accumulation and retirement strategies. In addition, he coaches varsity ice hockey for one of the St. Louis-area high school teams.
Readers of a certain generation almost certainly will recognize the headline above as a line from one of The Who’s most famous songs. In fact, it’s quite likely that many of the generation Pete Townshend was writing about may not only know every lyric to this classic rock hit, but they also may still feel a wave of the powerful emotions that the song stirred in them back when they were young and heard it with fresh ears.
And that’s kind of the point of this month’s roundtable.
Each generation has certain perspectives, ideas, habits, biases and ways of looking at the world that are unique to the members of that generation. I think most of us know that intuitively. But this month, we go beyond intuition and speak to three producers who specialize in three different generations — the baby boomers, Generation X, and Generation Y — in order to examine some practical ideas on the variety of problems each generation faces and the solutions people within those generations find most appealing. Providing the ideas are the following producers: Tom Henske, ChFC, CLU, CLTC, CFS, with expertise in Generation X; Randy L. Scritchfield, CFP, LUTCF, with expertise in working with baby boomers; and Derek T. Stephens, a successful young producer who focuses on Generation Y.
Choosing a clientele
Charles K. Hirsch, CLU: Please talk a little bit about the generation you serve and how you ended up with so much of your business focused on people in this age group. Was this a conscious business strategy, did you simply find that you relate better to the people of this generation, or was it something else?
Tom Henske, ChFC, CLU, CLTC, CFS (Gen X): There are an extremely large number of investment bankers and hedge fund managers in a very small radius of my Lenox office in midtown Manhattan. In the beginning of my career, I found myself doing business with a younger demographic. I was fortunate younger investment bankers make quite a bit of money compared to others in their age range in different fields. This was helpful because I was young too, and I could relate to most of the concerns they were going through. For example, many of them were single or recently married, so establishing an emergency reserve fund and disability insurance were significantly more important than worrying about retirement, life insurance, and wills and trusts. Establishing a clientele close to my age range allowed me and my clients to grow together. The referrals I would receive from them were people in similar financial situations. Currently, most of my clients are between the ages of 35 and 55, and married with children. They are perfect candidates for our suite of services.
Randy L. Scritchfield, CFP, LUTCF (Boomers): I primarily serve clients 55 to 70 years of age. These clients are either in or preparing for retirement. I have always related best with people 15 to 20 years older than me, and now, coincidentally, that generation represents one of the biggest and most important planning groups in the United States.
Derek T. Stephens (Gen Y): While I serve clients of all ages, many are between the ages of 26 and 37. It’s the group of people I relate to and understand best. This generation is the one I spend the most time with outside of business. Understanding my clients’ emotions and perspectives is at the core of the way I build long-term relationships.
Different generations, different concerns
Hirsch: Can you share what you find to be the biggest financial concerns on the minds of the people within the generation you most focus on? And can you talk about the kinds of discussions you initiate with prospects to uncover those concerns?
Scritchfield (Boomers): One of my market’s biggest concerns is outliving their savings. When I speak with clients, I remind them how important life insurance was to purchase when they were younger and raising a family. Now, when they are either in or preparing for retirement, I encourage them to consider income insurance in case they outlive their savings.
Stephens (Gen Y): The biggest financial concern I am seeing on the minds of young professionals and young families is savings. Are they saving enough money? Are they saving enough for retirement or a child’s education? The majority of them aren’t sure if they are doing enough or don’t know the right places to save money for their needs. I try to work with clients to understand their vision for the future. I ask them to tell me how they see their life unfolding and where they see themselves financially. When we get this established, I am able to come up with financial solutions that are tailored to their needs and objectives.
Henske (Gen X): My typical client has a financial life with epic levels of complexity, and they are raising the white flag to surrender for assistance. They are certainly smart enough to do their own planning, but given there are only 24 hours in a day, they don’t have enough time to do their own planning. What little free time they have is better spent with their family. I find many of my clients are trying to wrap their hands around what’s most important to them and how to effectively prioritize. The majority of clients I work with find themselves in a job they aren’t as passionate about as they were when they started. They look to me to show them they are not their job, but rather their job is just a vehicle to get them to where they want to go in their lives. At Lenox, we spend a tremendous amount of time in the beginning of the client relationship on what we’ve coined as “Money and Your Questions,” which gets to the root of the values clients want reflected in their financial plan and lifestyle.
Common generational characteristics
Hirsch: If you were to describe the character of the people in the generation you serve, how would you describe them? And how do some of the common characteristics of that generation affect the way you do business with them?
Stephens (Gen Y): Young professionals and young families are definitely different from other generations. Many people of this generation that I serve don’t have a long-term vision and strategy on how to get to where they want to be financially. This is a group that thrives in short-attention-span spaces like Facebook and Twitter and that wants immediate results. Solid financial plans succeed because they are focused on the long term. It takes obedience, steadiness and consistency when it comes to planning for one’s financial future. Ideally, the ups and downs of the economy should not affect one’s long-term planning. I have to make sure I communicate this and help my clients understand that the long-term planning process doesn’t always have immediate results. I have to do more educating when my client or prospect doesn’t understand the long-term planning process up front.
Henske (Gen X): You have to put in perspective the time period my clients have been in for their adult years. For many of them, they were just beginning adulthood in the late ’90s, during the Internet bubble. They had visions of an easy life with money readily available, because bonuses were big and the money they invested was getting a 20% or more rate of return. Just as they were hitting their stride, the floor came right out from under them in a downward spiral from 2000 to 2002. It shook their confidence and shattered their vision of how they thought life would be. They were fearful of losing their jobs and afraid to invest in the market. Then, just when their lives seemed to be returning to prosperity, in 2008, the floor again crumbled. Owing to the events of the past 15 years, there is a fair amount of skepticism, resentment and fear lingering. Unfortunately, broken trust still permeates the financial services business today, only making it more difficult for those of us who have intelligently and diligently served our clients over the years.
Scritchfield (Boomers): Most of my clients in the retirement planning market are relationship-based in their business dealings. They tend to be delegators and occasionally collaborators, but seldom do-it-yourselfers. This is a function of both their generation and the current stage of life. They have neither the interest nor the time to “go it alone” on their retirement planning.
Sales process preferences
Hirsch: From a more practical business operations standpoint, how do the people within the generation you serve like to interact with you and what are their expectations? In other words, do they value referrals from other trusted advisors, or are they more open to cold calls? Are they concerned about digging into the financial strength of the companies whose products they are buying, or do you find they’re open to the recommendations you make? Do they expect you to simply educate them on their options, or do they expect you to make specific recommendations for them? Are there any other expectations they have that affect how you approach doing business with them?
Henske (Gen X): People of the generation I serve have a higher standard of evaluating services provided before they engage. I’m finding being “referred in” is a must. If the quality of advice and strength of companies’ products you recommend are not rock solid, they will quickly lose confidence in you as their advisor. They are slow to hire you, but quick to fire you if you don’t meet their expectations. I’ve found great success with laying out exactly what we are strong at, what we won’t do, and why, early in the relationship. Setting reasonable expectations is crucial to a long-lasting relationship. Clients demand a process wrapped with strong and secure technology that enables their finances to be viewed in a user-friendly fashion. That’s a tall order, mandating advisors to spend a lot of money back into their business. Partnering with strategic alliances providing back office support leads to a stellar client experience. While advisors are on the front stage, it is equally important they have an even stronger backstage.
Scritchfield (Boomers): The retirement market is value based and trust based, and clients prefer to meet with an advisor through a referral process. Once working with the client, it is fundamentally important to always do what you say you will do to develop trust. As for client education, I find myself insisting on reviewing certain aspects of my recommendations to make sure the client understands as much as they should know as an educated consumer. However, many times their prevailing approach is, “Randy, you’re the expert. What should I do?” This makes honoring their trust and serving them properly even more important.
Stephens (Gen Y): Many young families and young professionals value referrals from other trusted advisors. This generation is very closed off to cold calling. Many will tell me they would like me to give them a heads up before encouraging others to call. People like to work with professionals that their friends and family trust. That said, I do think that this generation is conscious about working with companies that have strong financial strength, especially in this economy. My approach stays the same no matter what type of person I work with. I educate them on the process and explain why I am giving specific recommendations or strategies. Then we discuss the details. We have an obligation to make sure our clients understand how the strategy we recommend is going to work for them. Some want to know great detail; others want the basics. I make sure I am prepared for both.
Hirsch: Any further thoughts?
Stephens (Gen Y): When it comes to the part of the generation I am working with, who are just coming out of college, I stress the importance of a good and sound financial plan early in life. By starting earlier rather than later, they will have choices and options that maybe their parents didn’t have. If you come out of college and focus on planning your financial future when you get your first job, saving and planning become habits. The older you get, the harder it is to save money and build that habit. Start early, often, and stay the course. Life is going to have adversity. The person who plans — for both the best and worst times — and makes adjustments along the way will be better prepared to get to where they want in life.