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It’s one thing to acknowledge the RIA industry must brace for the next generation. It’s another to act on it.
The generational wealth transfer is the mountain range on our horizon, likely dominating the landscape for much of our careers. Yet many firms struggle to move from acknowledgement to action.
Broadridge’s “2024 Financial Advisor Marketing Trends Report” sums up the issue in a single stat: 78 percent of respondents named baby boomers as part of their primary business targets. It’s easy to see why: Boomers have more money. If you want to grow your business, you go for the clients that will give you the most revenue.
This approach overlooks a critical warning sign. According to Cerulli Associates, fewer than 20 percent of affluent investors stick with their parent’s financial advisors. This represents a significant loss of assets – or an incredible opportunity for growth and retention, depending on how firms adapt to the next generation.
I’m a millennial. Here’s how I’m getting my firm ready for next-gen clients.
Technology as the foundation
My approach starts with choosing technology vendors that create capacity for my operations team. It’s counter-intuitive, right? No matter what generation they’re in, most clients will not really care about your operations and compliance work. Their priorities are elsewhere.
But they will absolutely notice the capacity and flexibility that an investment in your back office will create.
Right now, my firm is piloting an AI tool that lets my teams “talk to” the data in front of them. The ability to quickly search for nuanced answers and next steps within internal forms, policies, and operational resources can make an RIA more agile and responsive.
In the future, I plan to expand this by incorporating tools that apply the same technology to estate planning documents and tax returns, enhancing our client-facing capabilities.
Redefining the client experience
Millennials look at client experience technology through a fundamentally different lens than older cohorts. This isn’t to say that gen-Xers and boomers lag behind them; we saw firsthand that older investors were quick to adopt video calls and remote work. But when it comes to how and where millennials want help with their money, advisors compete with retail trading platforms like Robinhood or Acorns or tech-enabled banking solutions like SoFi.
That’s not a great place to be. An RIA will have a hard time if they try to go head-to-head with a gamified, zero-friction trading app that promises fast money. But advisors can win when they create a planning-first experience with enough flexibility to allow the client to call the shots themselves. I also look for tools that give my clients 24/7 virtual access to financial professionals when the need arises.
For example, my partnership with Tiffin @Work, which my firm will be piloting with a few of our 401(k) plan sponsors this summer, provides participants with access to key information about their employee benefits, payroll, and retirement plan, while deploying AI to embark on micro-planning journeys that assist with everything from building emergency savings to planning for college and evaluating their insurance coverage.
When a client opens a portal to contact our advisors or make routine investment and planning decisions, I want the experience to be as smooth and responsive as if they had dropped into the advisor’s office in person. You can be the sharpest financial planner in the world, but if the client-facing tools you offer are a throwback to 1999, millennial investors will drop you.
The bottom line
Investing in tech to attract next-gen clients is, by definition, investing in a firm that is more sustainable over the long term. If you’re planning an exit, that often means a higher valuation. If you aren’t, you’re making your business more resilient and future-ready. Don’t just look at who has the most money right now. Look where the wealth is going and prepare your business accordingly.
Nate Lenz is the co-founder and CEO of Concurrent Investment Advisors, bringing nearly two decades of experience in financial services and a singular focus on empowering advisors to have a meaningful impact on those they serve. Prior to launching Concurrent, Nate was the co-founder and managing partner of I&A Consulting, a boutique consultancy focused on M&A and Practice Management.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.