Investment advisors will be making a big mistake if they ignore the next generation of investors, who may not have the level of assets that advisors desire today, but will soon, Michael Alexander, president of Wealth Management at Broadridge Financial Solutions, told attendees at Sifma’s Private Wealth Conference today.
Millennials and Generation X investors stand to inherit $6 trillion dollars in wealth over the next decade and they are not known for sticking with their parents' wealth management firms, Alexander warned.
“The biggest deficit firms have is ignoring investors with lower levels of assets. The next generation of investors are the ones who will inherit the trillions of dollars from our parents and my generation,” Alexander said in an interview.
While much of advisory industry has been built on face-to-face, traditional relationships, often with a head of household who has often been a white male, now you’re going to see trillions of dollars transition to the next generation of investor who invests differently, he added.
Next-generation investors are more collaborative, they expect more validation with regard to investment and planning recommendations than past generations and they expect a highly personalized, digital experience, he said. Some 90% of investors of all ages have told Broadbridge they will leave a firm if they don’t get a seamless, meaningless experience, he said.
“You aren’t going to be able to attract the next generation using the tools and methods advisors have been using,” Alexander said. Firms need to use technology to create “a great, highly intuitive experience that leverages artificial experience, behavioral science and data to deepen client relationships,” he added.
“It all comes down to, ‘do you get me?’” he said. “If I care about retirement and you care about funding college education, you don’t want to see things or hear things that don’t relate to your goals. So advisors have to be able to reduce the noise by building technology that emulates other great consumer experiences."
Broadbridge, which services over 85 million advisory clients and almost 40% of the industry’s advisors, is building the wealth management industry’s next generation platform, using a strategic partnership with UBS Wealth Management USA, which is the firm’s anchor client for the platform.
UBS has rolled out its platform “in many areas at this point, and is getting very high remarks from their advisors in terms of how it’s helping them increase their revenue and gather assets,” he said.
The right system needs to be open-ended, whether firms want to use their system or work with a firm like Broadbridge or a third-party vendor, Alexander said. At the end of the day, a platform should be in “a single container, with one log in and the capacity to digitalize and personalize the client’s journey,” he said.