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Client expectations are always changing – and they’ve evolved significantly in the past decade.
This shift isn't surprising, but what is crucial is our ability to deeply understand and adapt to these changes, especially within key demographic groups that represent both current and future opportunities.
Leading the charge are millennials, women, and Gen Xers, many of whom are hybrid investors (those who work with an advisor and invest on their own). Insights from State Street Global Advisors shed light on these influential segments:
- There are 72.2 million millennials in the U.S., now the largest generational demographic in the country. They’re diverse, educated, and 82% are hybrid or self-directed-only investors.
- Women control over $10 trillion in U.S. household assets and are expected to control up to $30 trillion by 2030. Fifty percent are self-directed and 24% are hybrid investors. Women are focused on long-term value and more loyal to advisors than men.
- Gen X is an underserved demographic and more likely to be pessimistic than other generations. Seventy-nine percent are concerned about having enough money to live through retirement, and more than 50% are self-directed investors.
- Hybrid investors are a growing market. Seventy-three percent are optimistic about their finances, and 37% say they’d leave an advisor if their portfolio underperformed benchmarks. Many don’t receive comprehensive advice from the tools they use and may benefit from working with an advisor. This segment also exhibits a high degree of interest in nontraditional asset classes, including art, crypto, and private equity.
Additionally, it’s worth noting that, according to JPMorgan Chase, there have been significant increases in investment account activity among Black and Hispanic Americans, making these investors a worthwhile focus for advisors as well.
So what do these young, diverse, next-gen investors want?
One preference that transcends age and other factors is easy, open communication and networking. If underserved demographics are going to work with advisors (and pay fees), they expect an unrestricted channel for asking questions and exchanging ideas.
That’s particularly true for hybrid investors, who desire control and influence over financial decisions but want to take a collaborative approach to managing their wealth.
Today's investors are looking for more than just traditional portfolio management – they want (and, in many cases, need) holistic services like risk management, tax planning, and estate planning. Moreover, the delivery and execution of these holistic services should mirror the ease, interconnectivity, omnichannel capabilities of the apps they use every day.
The example set by online retailers and app-based services such as Amazon and Uber has increased the demand for all-in-one advisory services. Clients expect multiple points of contact that come together to create a client-centric, streamlined experience.
Consequently, attracting the largely overlooked market of self-advised and hybrid investors requires a multipronged approach that starts with technology.
Clients should be able to log in to view their account and portfolio at any time – and access everything from real-time market updates to personalized notifications to help them stay active and make informed decisions. The goal is to build a techstack that aligns with your services while meeting clients’ needs.
As we enhance our technological capabilities to meet the demands of a diversified client base, it's imperative to also expand our service offerings. Financial advisors and wealth managers should consider the preferences of emerging affluent clients who often seek comprehensive, all-in-one financial solutions.
According to insights from industry expert Michael Kitces, integrating services such as tax planning, insurance, and estate planning not only meets this demand but also opens avenues for embedding advanced technology. This, in turn, can streamline operations and provide a holistic management experience that resonates well with these next-gen client segments.
AUM minimums are another area where advisors may need to strategically pivot. RIAIntel has pointed out the gaps in investment account sizes between different demographics. Some up-and-coming investors are shut out of advisory firms thanks to AUM requirements they can’t meet – which may explain why so many are self-advised. Something as simple as lowering or even eliminating these minimums can open your services to an array of new clients.
Finally, since cost is an issue, particularly for those with smaller amounts of assets to manage, it may be necessary to adjust fees to accommodate hybrid and/or additional services.
While these may feel like concessions, the result could be higher median revenue per advisor. Moreover, incorporating technology and offering hybrid services frees up advisors to work with more clients and increase their income as a result.
The bottom line is that, when it comes to attracting new clients, less may actually be more. The combination of streamlined services and technology works to make services more appealing and more affordable for clients, while making everything more profitable for advisors.
Matt Reiner is a CFA, CFP®, and partner at Capital Investment Advisors, a $2.8+ billion RIA in Atlanta. Reiner is also CEO of Wela Strategies, a sister company to Capital Investment Advisors, and is the founder and CEO of Benjamin™. Benjamin is an AI technology created by Reiner after seeing the gaps in technology used in his own firm. Reiner’s true passion is using his vast experience to coach other advisors across the country, helping them evaluate their firms’ practices and find the best strategies for future success. To reach Matt Reiner, visit www.MattReiner.com
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
