Getting to know the investors of tomorrow

Marketers targeting financial advisors must help them prepare for the great intergenerational wealth transfer

February 10, 2021

Getting to know the investors of tomorrow

Many financial advisers (FAs) and financial services firms have built thriving businesses off the back of the baby boomer generation, those aged between roughly 56 and 74, who are currently the wealthiest group in Europe. But as the boomers age, this wealth is rapidly flowing down to younger generations, with predictions that trillions will transfer to millennials over the next 10 or 20 years. As this happens, these younger investors are beginning to look for investment solutions of their own.

This huge intergenerational wealth transfer is understandably causing concern amongst financial advisers, themselves an ageing population, with over half having at least 16 years in the industry. Much as they have built strong relationships with the boomers, there is no guarantee that millennial investors will follow in their parents’ footsteps, threatening an exodus of revenue from traditional FAs. Advisers and financial services firms therefore have a challenge on their hands, to ensure they remain relevant amongst this new generation of potential clients.

Introducing millennial investors

They might be famous for relying on the ‘Bank of Mum and Dad’, but millennials are savvier with their cash than they are often given credit for, often saving diligently every month. They also differ from previous generations in that they have grown up with the internet, smartphones and social media, and these technologies have shaped every aspect of their lives from a young age. So, just as they order their dinner and meet their future partners via mobile apps, they expect a similar level of ease and convenience with their finances, as the recent emergence of numerous tech-based banking and investment brands demonstrates.

Financial advice evolves

With new generations coming to the fore, a new study by Greenwich Associates, commissioned by LinkedIn, shows how FAs are now starting to adapt their approach to suit this digitally native, millennial audience. 

Virtual relationships

FAs have traditionally relied on face-to-face meetings to build and nurture client relationships, frequently catching up over lunch or dinner, to understand their needs and put forward investment strategies. However, these relationships are rapidly moving online as clients look for greater convenience - a trend that has been accelerated by the events of 2020 - with over half of those questioned (53%) saying they have been spending more time in virtual meetings as a result.

Social media

The changing demographics of their client base is also encouraging more FAs onto digital channels and social media, where younger generations are more likely to look when they want information or advice. As one FA who took part in the study explained: “[Social media] will play a pivotal role in the future as more and more people are becoming interested in creating a nest egg. To connect with the younger population, it is imperative that a drive is done through social media. Otherwise you could be left behind.”

Social channels perform several roles for FAs, acting both as a news and information source, and a platform for sharing knowledge, networking and reaching potential new business prospects. According to the research, a third of FAs use social media as their primary source of financial information outside of the news media, while 84% specifically use LinkedIn, placing it ahead of the Wall Street Journal, Barron’s, Bloomberg and the Financial Times, for gathering insights and information. Meanwhile, nearly a third say social media and online advertising are vital new business channels (29%), placing them just behind personal referrals as a way of driving growth (32%).

A push-pull approach

As FAs shift their focus to this new millennial audience, financial services marketers must also evolve, to ensure they capture their attention. By taking a ‘push-pull’ approach, they can simultaneously help FAs to target millennials, and raise their own profile directly with these young investors.

Providing content to FAs – ‘the push’

Financial services firms are a hugely influential resource for advisers, with nearly half of FAs (47%) reporting that they are their primary source of information, placing them alongside industry publications (48%) and independent research firms (47%) in terms of influence. This gives marketers within these firms a fantastic opportunity to help FAs to target millennial investors by providing them with content that they can share on social channels to help facilitate conversations. For example, Greenwich Associates found that FAs frequently engage with high quality, insightful white papers (50%), text articles (47%), newsletters (31%) and images and infographics (25%), as well as exploring emerging formats, such as webinars (11%) and podcasts (7%).

Brand building – ‘the pull’

However, while FAs are developing their role as ‘trusted advisor’, millennial clients are also developing their own opinions, with three quarters of FAs (75%) saying that their clients request a specific product, and 76% reporting that clients are more likely to accept their recommendation if they already know the brand. To ensure they are front of mind, marketers must therefore ensure they are building awareness not just with the financial adviser, but also the retail investor, through above-the-line tactics on the apps, social media channels and websites where they spend their time.

Baby boomers aren’t going anywhere fast and will certainly require the services and trusted advice of their FAs for years to come. However, there is no question that the investing landscape is shifting, and smart professionals must get ahead of the game, before it’s too late. By adopting a push-pull approach, financial services marketers can help to ensure that a generation of investors isn’t lost forever.

To read more about how financial advisors are changing their habits to meet the needs of younger generations and a changing world, check out the full research report.