Advisors can learn a lot from a walk through a shoe store.

Like many baby boomers, I base footwear purchases on a combination of comfort, aesthetics and price. But this rudimentary formula for return on investment (the most comfort for the lowest price) isn’t sufficient for many young investors today.

When younger clients were asked to name the shoe brand that they feet does the most good, the number one response was the brand TOMS, according to a survey from the youth research firm Ypulse. The Playa Del Rey, California-based footwear company donates a pair of shoes to an impoverished child for every pair bought, according to its website. Sure, the shoes tend to cost a bit more, but for many young people today, it’s worth it.

The financial services industry tends to treat ROI like the be-all and end-all. During the decades that advisors mostly worked with baby boomers and even Gen Xers, this focus on ROI worked because clients prioritized it too. But, time and again, studies show young clients want more from their advisors than just returns. They want more socially responsible investing options, better technology and the ability to save time.

Advisors should be looking to brands like TOMS as examples.

For sure buying shoes is different from an investments strategy, but let’s take a closer look at SRI, also known as impact investing. Choosing an investment based on the potential for financial return, without regard to the investment’s social and environmental impact, is like walking into a shoe store and simply choosing what looks and feels the best for the cheapest price.

Advisors who only focus on financial return during their communications with current and prospective clients risk alienating or even repelling investors who prioritize SRI, and often that group consists of millennials.

In fact, nearly 80% of the millennials surveyed described themselves as impact investors, according to a BNP Paribas report. And with millennials set to inherit $30 trillion from baby boomers during the upcoming Great Wealth Transfer, millennials are a generation of clients that firms simply can’t ignore.

Then, there’s the technology issue. In the past, financial advice was all about the face-to-face meetings. That’s largely due to the preferences of baby boomer clients, who tend to view their financial advisors as partners, according to research from First Clearing. Gen Xers and millennials, by contrast, don’t share this partnership view of the advisor-advisee relationship. Members of these generations tend to perceive themselves as very busy and consequently want financial advisors who can save them time, the research shows.

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But here’s the rub: younger clients want individualized attention from their advisors, too, so sending out blanket emails on investing to young clients will do little good. Instead, advisors can meet next-generation client needs for both time saving and personalized investment by using technology to further traditional meetings.

First, advisors need to understand that their young clients want face-to-face meetings. The majority, 82% in fact, of millennials would appreciate more meetings with their financial advisors, according to a report by Deloitte.


Second, young clients have low-to-medium financial literary, according to the report. It’s this lack of knowledge that’s stopping a quarter of millennials from investing, according to a Facebook study. In all client communications — whether face-to-face meetings, a social media post or an email to a current or prospective client — advisors should steer clear of jargon and always leave the floor open for questions. An investment conversation is only effective if both sides understand what’s being said.

Finally, the primary medium of communication should be what the client wants, not what the advisor prefers. For millennials, a generation in which 90% of members check their smartphones within 15 minutes of waking, this preferred medium just might be digital, so older advisors accustomed to voice calls might have to learn a few new tricks.

Fitness apps from Nike+ Running offer a model of how to set goals with clients and then "deliver a steady stream of personalized positive reinforcement," Corporate Insight's researchers suggest.
Bloomberg News.


The next generation still wants ROI, but not in the way that we in the financial services industry tend to define it. Their investment isn’t just money — it’s their time and their trust, too. Their return isn’t just financial — they also want the knowledge that their investments are helping generate social and environmental good.

Millennials are making us redefine ROI, and it’s about time. Now, I just need to go out and buy a pair of those socially responsible shoes.

April Rudin

April Rudin

April Rudin is chief executive and founder of The Rudin Group.