Consider the contrasts in the following two snapshots.
The first picture is of millennial investors. This is the huge group of 18-35 year olds who are now accumulating their own assets while also awaiting a massive transfer of wealth from their baby boomer parents. A Google search on ‘millennial investor preferences’ yields about 677,000 research reports, news articles and other results that all say pretty much the same thing. Millennials are tech savvy, mobile-centric, and are comfortable using online tools and do-it-yourself approaches to investing.
The next snapshot is of financial advisors. Across all channels, there are roughly 300,000 of them in the U.S. today. According to research done by Cerulli Associates, the average age of these individuals is 50.9 years, and 43 percent of them are over 55. There’s plenty of research and commentary that confirms what our common sense tells us about this group. Compared to their age-group peers in other industries, advisors are slow to adopt new technologies. They’re generally a careful, analytical and methodical bunch. So it’s easy to understand why for many advisors, embracing new technologies and changing the way they do business aren’t high on their priority lists.
Taken together, these two snapshots show a large group of buyers and a majority of sellers heading in distinctly different directions. It’s a perfect recipe for a major market disruption.
In fact, that disruption is already underway. The growing popularity among investors of ‘robo-advisors’ and other automated portfolio management tools and online investment options is changing the status quo in wealth management industry.
How do traditional wealth management firms avoid “Uber-ization” of their advisory businesses? They must equip, enable and encourage their teams of advisors to adapt to the changing needs of clients and prospects. To do that, they need to update the infrastructure and tools they provide their advisors. The goal is to give advisors the tools and support they need to be more nimble and flexible in their service delivery.
How do advisors attract and retain critically important millennial investors, and stay relevant to them going forward? Advisors must recast themselves and their practices as more mobile, social and online. They have to deliver old style personalization to their clients, but do so more quickly, and deliver it in the new ways that prospects and clients now expect.
Everything that wealth management firms and their advisors need to make this vital transition is easily within reach. The tough part is getting firms and advisors into the mindset required for change. But given the direction of this market, what other choice do they have?
