Younger workers better savers, but advisers take a pass

CHICAGO — Younger workers are ahead of other generations when it comes to saving for retirement, but advisers still tend to prefer older and wealthier clients. A study showed that 68% of workers between the ages of 25 and 34 had already started saving for retirement. Yet only 34% of those over 65 said they had begun saving before they were 34. The study was commissioned by St. Louis-based Edward D. Jones & Co. LP, and 1,008 adults were surveyed by telephone June 28. The biggest reason that advisers tend to ignore younger clients is simply because they have fewer assets, said Mark Schoenbeck, senior vice president of professional development with Genworth Financial Inc. of Richmond, Va. A certified financial planner based in Castle Rock, Colo., he now works mostly with advisers. “A lot of it is just an issue of resources and time,” he said. “If you have a day to work on clients, do you want to talk with someone who has $650,000 in rollover assets or someone who is putting in $250 a month in a mutual fund?” Attitude problem Sometimes a lack of substantial assets isn’t the only obstacle with younger clients. Another huge challenge with younger workers — particularly those in Generation X — is that they don’t have the right attitude, said Mike Dubis, an adviser with Michael A. Dubis Financial Planning LLC in Madison, Wis. Generation X is not well defined but tends to include anyone born from 1961 to 1981. “I don’t discriminate against assets,” Mr. Dubis said. “I discriminate against attitude.” Mr. Dubis said he has had many younger potential clients who balk at his $200 hourly rate, and he feels that they don’t appreciate the value of good advice. He said about 10% of his client base is people in their 20s or early 30s. “I meet a lot of people that are in their 20s and 30s, and they don’t assign value to financial planning,” he said. “They call me, and they don’t want to pay.” A way to bridge the gap from older to younger clients is to work with children of clients, Mr. Schoenbeck said. “I have seen advisers working with younger clients successfully when the people are children of existing clients,” he said. Another obstacle is, advisers are often more comfortable working with clients their own age, Mr. Schoenbeck said. “We like to do business and spend time with people like ourselves,” he said. Some advisers are uncomfortable with the technology they feel that younger clients would demand, Mr. Schoenbeck said. Regardless of the obstacles, Clif Helbert, principal of the retirement plan marketing department for Edward Jones, said he believes that advisers can’t forget about younger workers. “This is a market that can and should be served,” he said. “No one’s going to give up on a traditional client, but they do need to figure out a way to structure in this segment into their day.” In fact, Mr. Helbert believes that because younger workers are indeed saving more for retirement, they likely need more help along the way to ensure that they don’t make any missteps such as cashing out a retirement account when they leave an employer. ‘Good start’ “They’re off to a good start,” he said. “They’re a mile into a marathon, and if someone doesn’t coach them the rest of the way, it’s pretty easy to lose track.” R.W. Roge & Co., a registered investment advisory firm in Bohemia, N.Y., has created strategies for younger clients with fewer assets. Ronald Roge, chairman, said his firm crafted the WealthBridge strategy targeted at younger clients — a smaller mutual fund for family members and friends of the firm’s high-net-worth clients. “We’re actively engaging them and getting them thinking about the market,” Mr. Roge said. “They’re very focused on retirement.”