Contrary to conventional wisdom, a study has found that young investors prefer traditional financial advisors over robo-advisors.
A survey conducted by ING Direct, a division of ING Bank Australia shows that young clients recognize the value of financial advice from financial advisors with an edge to online solutions. It also shows that more than 80% want a face-to-face advice relationship.
Another survey by First Clearing shows that despite dire predictions that robo-advisors are replacing human beings, the majority of respondents say that a financial advisor is still the best source of the long-term strategic advice they want.
Most investors think that traditional advisors will continue to play a dominant role in future, although their roles may look different.
So how can you adapt yourself to the changing needs of your clients?
Being a financial advisor, you need to adapt to new changes happening in the industry. When trying to acquire investors across generations, you need to follow different approaches to suit their preferences.
More than investors from other age groups, young investors are looking for advisors who use modern tools for financial planning. 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. They are more likely to switch financial planners based on the technology-forward methods and frequency of communication with their advisors.
Today’s young investors have definite ideas about the type of financial advice they want from their advisors. In the First Clearing survey, more than half of the respondents say the most important type of financial advice is how to build financial stability over the long term. What’s more revealing is the fact that they prefer to get this long-term, strategic guidance from a living, breathing advisor rather than from an online source, such as the ‘robo-advisor.’
Different generations may have different pain points about investing and wealth management but how they define financial security and what motivates them to invest in the first place is clearly linked to the individual’s stage of life. Identifying and addressing these drivers will help advisors build effective financial strategies for their clientele. The idea is to zero in on what’s top of mind for different generations. In the process, trust will deepen and clients will feel much more understood by their advisors.
Also, it isn’t just a certain type of advice that investors want, they also want their advice delivered in a certain manner. Three-quarters of young clients agree that advice which is objective and doesn’t appear to be a sales tactic, whether in tone or in bias toward a certain product, can be deemed ‘valuable.’
While considering the mode of contact, contrary to what some might think, even the younger generations prefer face-to-face communication over calling, emailing and texting. It says that initial interaction with a financial advisor should be face-to-face. The same goes for regular reviews of investments, which investors expect from one to three times a year.
We hope these tips will prove useful in building a solid practice.
