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I recently had a conversation with the Datalign Advisory co-founder, John Wernz, about how he’s hearing more financial advisors are struggling to bring on new clients from referrals and need help building a digital marketing plan. He said firms are struggling to reach younger demographics because they have different values and do not care as much about referrals as older generations. Gen Z and Millennial clients are finding advisors in new avenues, like online reviews and social media. Firms not embracing new strategies are at risk of facing declining organic growth rates.
We’ve been working the past two years to develop new growth tactics for firms – such as leveraging new resources like digital ads – to find new clients in addition to traditional referral methods.
This problem is only being accelerated by the current state of our economy. There is a Great Wealth Transfer looming, and as much as $100 trillion is expected to be passed down from Baby Boomers to younger generations over the next 20 years. That’s in addition to an estimated $100 trillion growth in global wealth that will create some of the wealthiest generations our economy has ever seen. These demographics coming into new money will need more help than ever managing their capital.
For Registered Investment Advisors (RIAs), this convergence creates the perfect opportunity to provide sage wealth management strategies to younger generations, who are eager for financial stability, innovative planning and sound advice.
However, reaching these new audiences will require RIAs to shift toward new approaches for client recruiting. While Gen X, millennials and Gen Z may be more open to talking about money with their peers, their communication channels are dramatically different. Rather than trading tips over a round of golf or drinks with friends, they’re sharing TikToks and reposting influencer memes.
The good news is that while RIAs may need to update outreach strategies, the core services and value provided haven’t changed. Just as we’ve upgraded from CDs to streaming services, the music remains the same.
While referrals will always be a valuable lead source, here are five new strategies that can help attract digital-native generations by meeting them where they are:
1. Amplify your online presence. For the first time ever, Gen Z is considering online channels more than referrals and nearly 80 percent of millennials and Gen Z have gleaned financial advice from social media. That means more than ever, growing a digital marketing presence is essential. Consider building a social channel as an influencer by posting smart strategies and advice to Instagram or TikTok and bolstering your LinkedIn profile with educational content to position yourself as an approachable expert.
2. Cultivate online reviews and testimonials from clients. Referrals work because they come from verified, trusted sources – people value advice from peers they know and trust. Embedding Google Reviews into your website or featuring client testimonials on your site and social channels are essentially the same thing. It’s just a smarter, more efficient way to build this “social proof” at scale over the channels younger people are using.
3. Leverage publishing resources. Online ads are table stakes for digital marketing, but how and where you place ads makes a big impact on their effectiveness. Working with organic lead providers using precision demographic targeting to place ad content in relevant publications can deliver leads with much higher intent. And they can do so more affordably with higher ROI than a full-on media campaign or blanket ad strategy. Also, consider contributing thought leadership articles to high-traffic publications to build reputation and trust among target audiences.
4. Master your messaging. Younger generations may have the perception that most financial advice is stodgy, stuffy and geared toward older folks. Take this opportunity to change their minds. Create content that’s geared toward a younger audience, that connects with them on an emotional level and presents a more vibrant personality and style. Young people have access to an overwhelming amount of information, so they’ll likely know a lot of the jargon, but they still need a disciplined, methodical approach to creating and growing wealth.
5. Diversify and integrate your efforts. Just as you would advise your clients to diversify their investment strategy, integration and diversity are key in digital lead generation. It’s extremely rare that the last touchpoint leads have with your brand or content (known as “last touch attribution” in marketing) is solely responsible for driving them to your firm. Instead, it takes an integrated multi-channel approach with strategic, aligned messages to build awareness and trust. Don’t discount a channel or strategy based solely on the web traffic it generates.
Make no mistake: Referrals aren’t going away. RIAs shouldn’t abandon those cultivation efforts completely, but relying on them as a sole lead source will not support future growth strategies for a firm with younger generations.
Expanding outreach to include a well-orchestrated digital lead generation strategy is the most effective and efficient way to grow a client roster and help new generations navigate the Great Wealth Transfer with optimal financial strategies.
An experienced entrepreneur, Satayan Mahajan is Chief Executive Officer of Datalign Advisory, an AI-enhanced platform that enables one-to-one matches between consumers seeking a financial advisor and industry-leading advisory firms. Focused on quality over quantity, Datalign’s platform is designed to create more meaningful connections and financial outcomes and referred nearly $15B in assets in its first year.
Satayan is a frequent guest lecturer in the field of product design, innovation and entrepreneurship and holds several patents in Blockchain, AI, and natural processing. An MIT graduate, Satayan currently resides in Cambridge, MA, with his family.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.