Advisors focused on Generation X and Generation Y clients are blazing trails—creating new fee and service models to serve this demographic—and they're excited about the potential of this large and untapped market.
Members of the Gen X demographic, roughly 37 to 48 years old, and Gen Y, or the millennial group (ages 19 to 36), number in the tens of millions—and they want and need financial guidance.
"Where the industry zigged, we zagged. It made good sense to serve the underserved," said Andy Seth, a member of Gen Y, at age 36, and managing partner of LotusGroup Advisors, which has a primary focus on these two groups. "Most of their options are brokers."
Rebecca Schreiber, certified financial planner and owner of Solid Ground Financial, said she "knew there was this group of smart young people here, with lofty goals, who had the cash flow to pay [financial planning] fees."
"But no one would talk to them if they had less than $500,000," she added.
Gen X and Y clients have specific issues from the traditional advising client.
"I understand their perspective, [and] it's completely different," said Schreiber, also 36. "They're not worried about defined contributions or Social Security; they're focused on cash-flow management."
Read More3 reasons to court younger clients
She has also noticed several changes to this demographic over the past few years.
"They've become more globally-focused, traveling and working in other countries," she said. "Many of their concerns have an international component, such as having an overseas family."
They have also become more multigenerational.
"Since the recession hit, generations have jelled financially—for example, parents who have lost jobs have moved in with their adult children," Schreiber said.
When targeting these clients, advisors are drilling down to sub-niches.
For example, LotusGroup Advisors targets several specific types of clients, including young community leaders, and families with kids under age 10, according to Seth.
Read MoreGetting kids to save for college now
Why specifically age 10?
"By the time kids are 10, things are in place, like 529 plans and a financial advisor," he said. "But if not, it's either a symptom of resistance or they just want to know, 'Can you make more money for us?'—which is not a fit for our practice."
"If you believe in a niche, you need to commit to it," said Andy Seth, managing partner of LotusGroup Advisors. "We turn down about 4 or 5 percent of potential clients if their behavior is only return-focused, or transactional-oriented."
Here are a few questions LotusGroup uses to profile clients to ensure a good fit for their client community:
At Mom and Dad Money, Matt Becker specifically targets new parents or those planning to start a family soon. He was inspired by his own experience as a new parent.
"It was frustrating to try to get the answers I needed," he said, adding, "With parenthood, there's a lot of need for basic things like life insurance, disability insurance, wills. It can feel very overwhelming. "
Gen X/Y-focused advisors have adapted their approaches to their clientele's needs, whether fostering community, meeting clients virtually or meeting them where they work or live. Advisor compensation models are evolving, as well.
"A lot of our clients were starting to [ask], 'How can you work with our college kids?'" said Andrew Sivertsen, certified financial planner with The Planning Center and president of FPA NexGen, the Financial Planning Association's organization for young financial advisors.
He and the firm's other young advisors introduced a feeder system to grow young professional clients to their full potential. Instead of the traditional asset-based percentage fee, young clients pay a monthly retainer fee for one to three years and then "graduate" to a full-service level.
"It's a new way of looking at the business: Bring clients on at age 30, and have them for 40 or 50 years," Sivertsen said.
Seth's practice, LotusGroup Advisors, sponsors and organizes a constant stream of fun and philanthropic events for its family of clients.
"This group of people wants to be a community," Seth said. "They want to do well and do good. That's why we do so many civic events—to help them do well financially, help the community, and increase their fitness, " he added.
Read MoreGen X investors need advisor help
The firm's advisors also do "house calls," meeting clients at their homes outside of business hours for consultations.
Compensation is based solely on a percentage of assets. Revenue growth has been healthy.
Besides growth through referrals, our clients are adding to their assets because they're young, " Seth said.
Advisors are also finding ways to provide services outside the traditional brick-and-mortar operation.
Becker's practice, Mom and Dad Money, is conducted entirely online. His goal for his clients, mainly new parents, is to get them on the right financial track, and he works with them virtually via Skype or Google Hangout video. He reaches potential clients through his blog, which features relevant topics, and the e-books he writes and sells. His compensation is based only on hourly fees or retainer arrangements.
In 2012, Solid Ground Financial's Schreiber discontinued all her client relationships.
After conducting workplace financial planning seminars for four years, she realized that seeing individual clients was no longer the optimal way to practice. Instead, she transitioned her clients to other advisors and converted her practice to an in-house employer-based model.
"The most consistent and meaningful way to reach clients is at work," she said.
Schreiber's new practice model has three components. First, she's paid by the employer to deliver financial education seminars to employees, mostly from the Gen X or Y demographic. Second, she is paid by the employer's Employee Assistance Program to meet one-on-one with employees for financial counseling. Finally, she consults with the human resources departments regarding employee benefits.
"These clients don't fit into assets under management models, because 90 percent of their assets are in their workplace plans," she said.
—By Deborah Nason, special to CNBC.com