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Digital Divide: How Younger Advisors Are Attracting Next Gen Clients

Industry Trends and Research

A new study reveals distinct differences between younger advisors and their more experienced counterparts in how they use technology to attract new clients and retain existing ones.  

In what may come as no surprise, Millennial advisors were found to be far more likely than Baby Boomer advisors to leverage technology to enhance profitability and attract the next generation of clients. According to Nationwide’s 5th annual Advisor Authority study, nearly three in 10 Millennial advisors (29%) say that adding new technology is the most important thing they will do over the next 12 months to enhance their practice’s profitability – about three times more than Boomer advisors (11%). 

Similarly, 20% of Millennial advisors say that consolidating existing technology is most important to enhance profitability – nearly seven times more than Boomer advisors (3%). 

When asked which solution they are most interested in integrating into their practice over the next 12 months, Millennial advisors are more likely than Boomers to cite: 

  • mobile websites and/or mobile apps (48% vs 23%);
  • tools for risk management, risk monitoring and portfolio stress testing (46% vs 33%); and 
  • interactive websites and/or client portals (40% vs 23%). 

When asked which tech enabled solutions will help them to better support client needs over the next 12 months, two generational differences are most prominent, according to the findings. Millennial advisors are over four times more likely than Boomer advisors to use artificial intelligence and/or data analytics to understand client behavior (18% vs 4%). And while 12% of Millennials say they use robo advisors to provide better service, only 1% of Boomers do the same. 

Next Gen Attraction

As for client acquisition, Millennials and Boomers differ on which generation of investor will be their primary target in the next 12 months. Millennial advisors are more likely to target fellow Millennial investors (51%), followed by Gen X (26%), Gen Z (10%) and Baby Boomers (9%). In contrast, Baby Boomer advisors are more likely to target fellow Baby Boomer investors (47%), followed by Gen X (33%), Millennials (12%) and Gen Z (1%). 

Boomer advisors are also more likely than Millennial advisors to work more with a client’s family and children (44% vs 20%) and focus on their years of experience (27% vs 13%). They also are somewhat more likely to focus on personalized advice for a holistic financial picture (25% vs 19%). Millennials, meanwhile, are somewhat more likely than Boomers to increase their use of social media to attract the next generation of investors (28% vs 22%). 

Client Service   

The study further notes that both Millennial and Boomer advisors agree that the top way technology helps them to better serve clients over the next 12 months is understanding clients’ current needs and behaviors (30% and 35%). 

Millennials, however, are somewhat more likely than Boomers to say technology helps them deliver better service by: 

  • analyzing and understanding clients’ expectations (29% vs 19%); 
  • protecting clients’ assets against market risk (29% vs 23%);
  • providing more personalized holistic planning (26% vs 18%); and 
  • predicting the impact of investing decisions (24% vs 17%). 

Notably, the study found that Millennials are more than twice as likely as Boomers to use technology to concoct investing strategies for better returns (21% vs 9%). Alternatively, Boomers are more likely than Millennials to say the top way technology helps them provide better service is to free up time to focus on one-on-one relationships with clients (38% vs 26%). 

To that end, Craig Hawley, Head of Nationwide’s Annuity Distribution, suggests that the two generations can learn from each other. “Just as Boomers can take a page from Millennials’ playbook, by adopting AI, robo and other technology, Millennials can follow the lead of more experienced advisors, by not losing sight of the human connection, building strong one-on-one relationships and working with their clients’ family and children to build a more profitable practice,” says Hawley.  

Nationwide’s online survey was conducted by The Harris Poll from Feb. 15 to March 4, 2019, among 1,021 financial advisors, including 507 RIAs and 514 Broker/Dealers, including 622 Millennials, 299 Generation X and 94 Baby Boomers. 

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