Nov 23 2023
Tailoring financial advice to clients of different demographics
When it comes to speaking and pitching to clients of different demographics, it is important for financial advisors in Singapore to understand that each demographic has their unique set of financial needs, goals and challenges. For example, a young Gen-Z client in Singapore who is just starting their career will have separate financial goals and challenges compared to a Baby Boomer who is focused on preserving their wealth for the next generation and generating income during their retirement years.
Two-year Singapore MDRT member Benjamin Ong shares that clients in different life stages may also have different priorities for financial planning. For example, a client who is getting married may need help combining finances with their partner, while someone who is going through a divorce may need help untangling their finances and assets.
Useful strategies when communicating financial advice to clients of different demographics
1. Baby boomers
As the largest demographic group in Singapore, baby boomers have profoundly impacted society, particularly in terms of the economy and workforce. With many reaching or approaching retirement age, their main concerns now include maintaining consistent income flow, starting legacy planning, and bearing medical costs associated with old age or chronic illnesses.
To address these concerns, Ong would prioritize the conversation topics to be on legacy planning and the importance of having financial security during retirement for baby boomer clients. Instead of explaining the benefits of all types of insurance or taking them through lengthy policy brochures, he instead goes straight to the point to recommend a combination of fixed annuities for guaranteed income and long-term care insurance to address potential health concerns during retirement for these clients. Ong understands that with their age, he needs to ensure that baby boomer clients include conservative investments in their portfolio to ensure that they are well taken care of after they retire.2. Millennials and Gen-Zs
Millennials and Gen-Zs have faced unique challenges in the job market, including higher levels of student debt, lower wage growth, and limited career opportunities. As a result, some have had to adapt to the gig economy or work part-time on the side to supplement their income. This results in millennials and Gen-Zs valuing flexibility and options that allow them to adapt to changing circumstances when it comes to picking the right insurance policies for themselves.
For example, they might seek insurance policies that offer protection in the event of unexpected job loss or medical emergencies, while also allowing them the flexibility to access funds for other purposes, such as making big-ticket purchases. Armed with the knowledge he has about millennials and Gen-Z clients, Ong would tailor his recommendations according to their preference for flexibility. In this case, this would mean recommending term life insurance policies that give policy owners the freedom to convert the policy into a whole life plan at a later stage. Since these clients are younger, he would also fork out time to educate them about the importance of starting investments at a young age and introduce them to investment-linked plans that allow for coverage adjustments based on life changes.
Ong recalls a millennial client he met at a networking event, asking him why endowment plans from insurance companies are popular amongst clients when investing in the S&P index funds generate a much higher return in comparison. With his understanding that millennials are usually driven by returns when it comes to comparing insurance or investment policies, Ong explained to the client that endowment plans are low-risk, and meant to be a parachute for retirement and to achieve savings goals instead of disagreeing with him right off the bat. To answer his client’s question and correct his misconception in a succinct way, he simply said, “Endowment plans are the savings you put faithfully aside, and when you need emergency funds, it will be there for you.”
Customization is key
Despite the difference in needs and lifestyles of millennials, Gen-Zs and Baby Boomers, Ong believes that flexibility is key when it comes to servicing clients from different demographics. “A client’s demographic and age group can guide you on how you can best communicate with them, but it is not their whole truth, [as] not all clients think the same way,” he shares. Therefore, Ong encourages financial advisors in Singapore to be flexible in their communication techniques and policy recommendations but be well-equipped with the right technical knowledge to address clients’ concerns and questions along the way.