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Out with the Old, in with the New: Defining Next-Gen Advisors

  • Mike Stephens

    Mike Stephens

    Director of Business Partnerships

Created at March 20th, 2020

Out with the Old, in with the New: Defining Next-Gen Advisors

Growing up the child of a retail banker, my financial services experiences stretch as far back as I can remember.  I have fond memories of spending countless hours in my dad’s office, experiencing firsthand the dynamic, look and flow of deals being made and personal engagements among advisors.  Every customer who walked into a branch was greeted by a gentleman wearing a suit, interactions only being handled in person, and meetings closed out with a gentlemen’s handshake. That staunch atmosphere is one that still sticks with me to this day.

In driving wealth accumulation through traditional means of investing, focusing on in-person engagements, relying on standard measures of pricing, and managing relationships through heads of households (i.e. male bread winners), these advisors have accumulated vast portfolios.  But what will happen when those conventional means of engagement are no longer enough to meet the needs of today’s investor?

Working with every age cohort, today’s financial advisors are fighting to stay on top of all the rapid changes related to new investment alternatives, the impact of Fintech, new ways of digital engagement, pricing pressure on already tight margins, and new entrants constantly coming into the market.  Add the fact that more than 30% of advisors are looking to retire in the next 10 years, and that the oldest baby boomers have begun transferring wealth to their children, and you’ll see that the next generation of financial advisors are faced with a market opportunity nearing $68 trillion in assets.1

With this massive transformational shift in wealth to a younger, more progressive generation, these Gen-Zers and Millennials are forcing registered investment advisors and wealth managers to think differently about how they attract, train and develop a younger, more diverse pool of talent.  As the pre-dominant investment shops build out their wealth management business, implement academies to educate their workforce, and/or expand their network of advisors, it’s imperative they focus on:  

  • Financial Wellness: Through discovery conversations, frequent engagement, and ongoing management of critical data and insights, advisors can pre-emptively understand the triggers and signals that fuel customer behaviors before they happen and send money in motion.  
  • Diversity and Inclusion: The female investor population is just one that is severely under served. Women have shown they’re more likely to engage with female advisors over men (46% vs. 34%), and with women expected to control almost 60% of private wealth assets by the end of 2020, firms need to have a more diverse, inclusive workforce that can engage across every gender, racial, and ethnic bias.2
  • Lead Generation and Referrals: With Gen Z clients having the strongest relationship with advisors, they have shown to provide 80% more referrals than older investors.  With the explosion of retail, and affluent customers with investable assets, younger advisors know instinctively what will get the attention of younger clientele. 
  • Digital Engagement: Clients are rapidly adopting digital and voice-enabled assistants for managing wealth and receiving financial advice.  As advisors explore new channels to gain clients and increase assets under management, they must continue to be more “growth-focused.”  With annual marketing spend more focused on new client acquisition (60%) than cross-selling of existing clients and family members (40%), exploring different means to engage clients in the channel of their choice has never been more important.3
  • Fee Transparency: Commission or volume-based pricing models are no longer the only means of compensation.  Advisors need to be willing to explore alternatives to ensure customers can use their preferred manner of payment. 
  • Environmental, Socially Responsible, Gender-Based Investing: Younger investors are socially and environmentally more conscious regarding their impact on society.  With investment alternatives trending towards climate change, socially responsible investment and environmental, social and gender focused investments, advisory services must be in tune with these investment philosophies to acquire and retain new accounts.

More than ever in the history of private wealth, investors are not afraid to change advisors to find the right mix of investment alternatives, costs, and responsible investing, and are willing to resort to extreme measures for what matters most to them.  Advisors who can create the most value, remain solution-oriented, and have a more integrated approach into the financial lives of investors are those likely to garner the most assets during this great wealth transfer.

As in retail banking, advisors and wealth managers have been incredibly transparent in acknowledging that improving the customer experience is their top priority and growth initiative for 2020. To fulfill these expectations, they’ll need to reinvigorate and modernize their approach to working with today’s investor and prepare their advisors to thrive and grow in a disruptive and ever-changing environment.  

Come to think of it, maybe it’s time for me to check in with my advisor!


1Investment News: “The Time is Now for Young Financial Advisors,” Published May 29, 2016
2Bloomberg: “Three steps to greater gender diversity in the RIA industry” Published July 11, 2014
3Broadridge: “Broadridge Survey Reveals How High-Growth Financial Advisors Gain Clients and Increase AUM” Published October 2, 2019