How Wealth Managers Can Get Younger Clients
Establish Relations with Beneficiaries
These stats tell a lot:
- 75% of clients said their children have never even met their financial advisors, per a MFS Investment Management survey of over 1,000 investors
- only 2% of beneficiaries retain their parents’ advisor (PriceWaterhouseCoopers survey).
- 90% to 95% of children leave their parents’ advisors upon receiving their inheritance, according to Fidelity and the Institute for Preparing Heirs.
The best thing to do is start meeting with the beneficiaries, sooner rather than later. Don’t wait until the clients’ passing may soon be approaching.
It takes time to build a rapport, and by using the time to establish that relationship and demonstrate credibility, the beneficiaries may be more likely to stick with their parents’ advisors.
Market to Millennials at Large
Relying on beneficiaries alone may not be enough, and there is a larger market of young people to reach out to beyond the children and grandchildren of a firm’s elderly clients.
Traditional forms of advertising like in print media and live television may not be the most effective for a younger generation that prefers video streaming services and accessing information right from their handheld devices.
Did you know that 47% of millennials and Gen Xers don’t watch traditional TV?
Investment firms can consider social media, apps, and streaming video platforms frequented by millennials, and they can target their ads to audiences by age, gender, location, education level, profession, interests, etc., depending on the platform.
Consider some options:
- Amazon Prime
- Amazon Kindle
Establish thought leadership
It’s not always about directly selling services and promoting the firm’s own greatness.
Rather, wealth management companies should provide information that is useful to people who are searching for answers, and the information they provide should be tangentially related to finance and financial services.
For example, a millennial might go on Google to learn more about how to apply for a loan, how to improve credit scores, living on a small budget, etc.
If a firm can create blog content, infographics, podcasts, or videos that provide insight on these topics while offering a unique and compelling perspective, the organization will build brand awareness, and their content can be distributed in others’ social networks.
Such marketing efforts and demonstration of thought leadership will instill a sense of credibility in the firm that is not lost on the prospects. When it comes time to select a wealth manager, they’ll be more likely to select and trust the investment advisory that has provided them with useful information before.
Go Digital. Go Mobile.
Millennials, and Gen Zers by extension, are used to using their smartphones and tablets. They’ve spent most if not all of their adult lives with the Internet, accustomed to accessing information in real time.
When it comes to their investment performance and analysis, they’ll want to access this info whenever and wherever they are. Providing up-to-date, accurate information in real time is not just a nice addition; it’s a default requirement.
Such trends illustrate why fintech startups have caught on well with millennials. The interactiveness in fintech mobile applications makes the client feel like they’re more involved in the process, and clients’ access to information increases transparency and accountability.
While it’s important to establish a personal relationship with the younger clients, wealth managers should also offer their clients a digital platform to view performance reports, analysis, and investment advice, with the incorporation of robo-advisory services.
As long as the organization and applications are trustworthy, millennials have no problem going digital. At the same time, they will appreciate knowing there is a human and experienced wealth manager behind the technology.
Operational Efficiency Is Key
Providing timely, up-to-date information on clients’ reports and performance is easier said than done. Without the technological know-how or resources, firms cannot fully deliver the wealth management reporting services for their clients.
Advisories may consider third party vendors that can set up RPA (robotic process automation) for routine tasks, improving processing times and reporting accuracy.
Outsourcing middle-office activities is not only a means of cutting costs, but it could allow for reconciliation and performance reports to be completed at the earliest time possible.
For example, trade data is released from custodians in the wee hours of the morning when most people in the US are asleep.
But a fund administration outsourcing provider could generate and deliver the reports before the wealth managers get to the office later that morning.
Firms will need to run a more efficient operations if they wish to properly serve young clients in a mobile-digital world.
Reflect Their Values
Millennials want to make money (who doesn’t?), but they’re conscious about the way their money is made.
Young people have shown greater interest in socially responsibly investing (SRI), a form of investing that seeks to bring about positive social, environmental, and workplace change while delivering competitive returns.
According to a Morgan Stanley report, Americans in their 20s and 30s are twice as likely compared to the overall investor population to put their money in companies targeting SRIs.
Wealth managers may attract more business by offering investment strategies that reflect young clients’ values and ideals.
Wealth Managers Need Millennials
Advisory firms will one day face a situation where their older clients pass on. While the loss of life is emotionally painful, the loss of clients can be financially painful to firms if there aren’t new clients to replace them.
Wealth managers therefore should reach out to younger people, including establishing connections with beneficiaries of current clients as well as reaching out to millennials at large.
Growing up with instant access to information for much of their lives, millennials will prefer (and demand) digital and mobile access to their reports and analysis.
They are strong proponents of socially responsible investing, and firms that cater to their investment preferences and values will benefit.
By taking proactive steps now, firms won’t be merely reactive to an issue that could have been addressed years before.
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