Advisors who are struggling to navigate generational shifts are not alone. Communication challenges between Gen X and younger cohorts are very real—not imagined.
According to research from Ernst & Young, as many as 70% of women and mMillennial/Gen Z investors will choose to part ways with their family’s financial advisor. However, research from the CFA Institute and FINRA has also found that younger investors lack the confidence, education, and expertise to make their best financial decisions.
Keeping this perspective in mind, the right technology will operate as a listening engine rather than a platform to increase the volume of alerts and push notifications. Gen Z and millennials are known to suffer from heightened depression and anxiety compared to other generations. The ability to listen is a demonstration of empathy and astuteness to their concerns.
Challenge #3: Pacing A Shifting Investment Landscape
Critical thinking and creativity key to standing out as financial advisors. After all, best practices in the industry are shifting. There are more financial products available to investors than ever before, and fundamental assumptions—including basic theories for portfolio diversification—are shifting.
However, advisors, focused on numbers, aren’t always well-positioned to communicate the rationale behind their decisions.
Consider a recent survey in 300 finance professionals shared that 64% of investors part ways with financial advisors due to feeling misunderstood. Much like social media, e-commerce websites, and streaming platforms, clients look to their advisors for individualized financial advice delivered through aggregated content that is relevant, valuable, and easy to navigate. Meaningful guidance and recommendations demonstrate advisors’ understanding of their clients’ unique interests and needs, making it vital for advisors to effectively leverage technology to match the customized digital experience and successfully align with their clients’ goals.
Advisors should gravitate toward a single provider that allows them to choose different software tools that appeal to clients and seamlessly integrates them for a bird’s eye view of everything that matters. As clients evolve, advisors are better equipped with the infrastructure to support those changes and offer more services.
Preparing For Evolution
It’s important to remember that technology supports adaptation. Ultimately, wealth management is a growth industry due to a confluence of macro factors: worldwide growth of high net worth individuals, rising alternative investment opportunities, more personalized investing products and increasing diversity of wealth holders.
Lincoln Ross is the CEO and president of CircleBlack Inc., a leading cloud-based software platform helping advisors better manage their clients’ wealth while growing and deepening advisor-client relationships in the digital age. Prior to joining CircleBlack, Ross was chief of business operations at Envestnet where he gained an appreciation for value creation in the RIA market.