Although this year’s market downturn has been a painful experience for everyone in the investment industry, the chaos in financial markets could have one potential silver lining for financial advisors: an opportunity to win over younger investors.
Gen Xers and Millennials now represent half of the mass-market investing segment. As that share grows, it’s imperative that financial advisors find ways to appeal to these generations of younger investors as a means of growing and even sustaining their businesses.
For most advisors, this is no simple task. Younger investors are much more likely than previous generations to use self-directed brokerage accounts, invest in passive strategies and at least experiment with low-cost robo-advisors. However, despite these DIY tendencies, most younger investors are not totally averse to the idea of working with a financial advisor. In fact, according to the results of the most recent Broadridge Investor Survey, roughly 60% of Millennials and Gen X investors already work with an advisor, and a sizable share of those who don’t say they are open to forming a relationship with an advisor.
This year’s market sell-off could make these investors even more open to meeting and working with a professional advisor who can help them steer through volatility. As advisors move to take advantage of this opportunity, here are five recommendations they can follow to build strong client relationships with Gen Xers, Millennials and other younger investors:
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1. Prioritize planning
While many Boomers and older investors seek out financial advisors mainly to improve investment performance, Gen Xers and Millennials are more likely to see an advisor as an expert coach who can help identify, plan and achieve financial goals for them and their families. Indeed, roughly 80% of Millennials in the Broadridge survey say they work with an advisor to plan their holistic financial goals — a notably bigger share than those found in older cohorts like Boomers and the Silent Generation. As a result, planning should be the centerpiece of the value proposition advisors present to younger investors.
2. Devote Yourself to Digital
There are two reasons for financial advisors to make enhancing their digital capabilities a top priority. First, younger generations want and expect robust and seamless digital service. Second, advisors can deliver personalized planning and advice across a book of clients only by leveraging technology. Advisors working to make gains among a younger client base should be incorporating online tools that allow them to tailor advice and solutions for individual clients, and deliver that advice through digital channels preferred by younger investors.