A recent survey by Wealthmanagement.com shows that while the modern investor wants financial advisors to use newer technologies in managing their money personal interaction still plays an effective role while making investment decisions and giving advice.
The responses were collected from 2,019 people above 18 years of age who are currently working with financial advisors. This survey was carried in US but the findings are relevant for IFAs in India too.
When selecting a financial advisor, millennials (89%) value modern tools for financial planning than investors from other ages. Another 89% also consider convenience as one of the important factor before choosing an advisor. Besides, 77% of Gen Y rely on peer recommendations or referrals and online reviews while selecting an advisor.
The survey also shows that majority of investors communicate with their advisors quarterly or annually. And despite modern technology tools — such as cloud, social and mobile platforms — most investors today manage their investments with their advisors through antiquated means such as face-to-face or over the phone. Millennials and Generation X investors are more likely to use digital channels for communicating with their advisors vs. baby boomers but in general clients’ investment records are still mired in older, paper-based formats, which limit how investors receive up-to-date information and real-time advice on their portfolios. 48% young investors prefer meeting personally while making investment decisions whereas 32% prefer using emails.
When it comes to trust, the report shows that financial advisors face trust challenges more acutely while dealing with younger clients. Only a third believe that their advisor would recognize them on the street and less than half believe their financial advisors have their best interests as their top priorities when giving financial advice. Only 35% of young clients believe that the financial advisor reaches out to them proactively.
Also, generational gaps emerge when it comes to the reasons why clients leave advisors. 35% of millennials leave because advisors were not aligned to their goals. They are also sensitive to out-dated financial modelling (45%). Lack of communication is a consistent issue across generations.
As an advisor you need to remember that younger investors are more enthusiastic about modern financial modelling tools and gaining holistic views of their investments on mobile platforms over their older counterparts. They are more likely to switch financial planners based on the technology-forward methods and frequency of communication with their advisors.
