Numerous studies indicate that firms need to do a better job of developing clients under 40.
While a 2018 study by the FINRA Foundation and CFA Institute found that both non-investing and investing Millennials harbor a degree of skepticism toward advisors, such perceptions play a very small part in developing this demographic. Instead, it appears that the opportunity is actually being lost at advisors’ own hands.
Perhaps it’s the influence of a tech narrative that claims Millennials have shifted their interest away from in-person advisement in favor of digital, DIY platforms. It turns out that narrative is not entirely true and quite misleading. According to a 2017 Accenture study, digital platforms are a necessary complement to in-person advisement, but they have not become a substitute. Millennials are taking a hybrid approach. As you might expect, advisors are the irreplaceable resource for issues that require advisement and deeper discussions. Per Accenture, top issues discussed with advisors are:
children’s financial needs (over 60%);
long-term financial needs of parents (nearly 60%);
inheritance (60%); and
estate tax planning (40%).
“Decoding the Millennial Mindset,” a 2018 study by Broadridge Financial Solutions, further reported that “73 percent of Millennials say that in-person communication builds the greatest trust with a new financial advisor.” In these cases, digital platforms serve more administrative needs, such as providing ease-of-access to investment performance, real time tracking, and clarity of reporting. To fully win the Millennial client, both human and virtual dimensions are expected and need to be in place. One provides depth and experience; the other provides on-demand access and data. Despite the notion of a disengaged, computationally-biased generation, person-to-person experience continues to hold special status and advantages amid digital natives. Above all, when it comes to investment decisions, human connection is the most effective antidote to skepticism. Perhaps that's because human experiences feel more genuine and reliable than much of what is experienced in the virtual world.
Millennials are also taking a hybrid approach to seeking-out advisors. The FINRA/CFA study indicated that Millennials use more than a couple of resources to find an advisor. The top resources are:
online search (40%);
referral from parents (31%); and
referral from friend or colleague (30%).
So if tech is not eating advisors’ lunch, then what’s the hurdle?
Surprisingly, many sources point to simple inaction on the part of advisors. The Broadridge study for example, found that amid Millennials whose parents have a financial advisor, “only 20 percent of them have ever met their parents’ advisor.” The lost opportunity calls to mind the Game of Thrones nun ringing her bell through King’s Landing: “Shame, Shame, Shame!”
So what’s the simple game plan to cover all the bases?
Hybridism:
Cultivate your presence both online and offline. Improve SEO and publish multiple digital touch points that establish your experience and credentials.
Fluency:
Master your ability to navigate your firm’s digital platforms and services so these can be discussed and demonstrated when the time comes.
Expansion:
Widen the circle around each client. In effect, your client is the COI to the rest of the family. Seek to understand the interests and values of your clients’ heirs. Be deliberate in your efforts to meet them. Ask your clients to bring their children into the fold.
Engagement:
Initiate discussions on substantial, long term financial issues – topics that warrant deeper understanding, and dialogues that share values, aspirations and perspective. These are the interactions that build a sense of connection, trust and loyalty.
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