Distinct differences between younger advisors and their more experienced counterparts include how they use technology and which solutions they favor
Louisville, KY—December 2, 2019—Nearly three in ten Millennial advisors (29%) say that adding new technology is the most important thing they will do over the next 12 months to enhance the profitability of their practice, roughly three times more than Baby Boomer advisors (11%). Likewise, two in ten Millennial advisors (20%) say that consolidating existing technology is most important to enhance profitability, roughly seven times more than Boomer Advisors (3%). There are also distinct differences in the way younger advisors and their more seasoned counterparts employ technology, and which types of technology they favor, as revealed by the fifth annual Advisor Authority study of more than 1,800 RIAs, financial advisors and individual investors commissioned by Nationwide Advisory Solutions and conducted online by The Harris Poll.
“As the first digital natives, Millennials have spent their entire lives with instant online access to almost everything, giving them a distinct advantage when it comes to leveraging new technology to stay a step ahead,” said Craig Hawley, Head of Nationwide’s Annuity Distribution. “And this becomes clear in our latest Advisor Authority findings, showing that Millennial advisors are three times more likely than Boomer advisors to say technology is among their top three factors for enhancing profitability… But they 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.”
When asked which solution they are most interested in integrating into their practice over the next 12 months, Millennial advisors are more than twice as likely as Boomer advisors to say mobile websites and/or mobile apps (48% vs 23%), more likely to say tools for risk management, risk monitoring and portfolio stress testing (46% vs 33%), and nearly twice as likely to say interactive websites and/or client portals (40% vs 23%). Younger advisors are also twice as likely to say Artificial Intelligence (34% vs 17%) and almost twice as likely to say robo advisors (22% vs 11%).
Millennial Advisors Favor Tech to Attract Next Generation of Clients
While they differ on the importance of using technology to enhance profitability, both Millennials and Boomers agree that the number-one driver of profitability is adding new clients. Millennial advisors say their top-three factors for enhancing profitability are adding new clients (36%), adding new technology (29%) and targeting high net worth clients (28%). Boomers, on the other hand, say their top-three drivers of profitability are adding new clients (55%), adding a younger generation of clients (30%) and attracting and retaining clients’ heirs (28%).
Millennial advisors are not only much more likely than Boomer advisors to have a strategy to retain client’s heirs (85% vs 64%), and nearly twice as likely to have changed their marketing strategy to attract a next generation of investors (71% vs 38%), these younger advisors are also more likely to use technology to help drive client acquisition in their pursuit of greater profitability.
To attract the next generation of investors, Millennial advisors are somewhat more likely than Boomer advisors to increase their use of mobile technology (25% vs 19%), over three times more likely to make enhancements to current websites and/or client portals (20% vs 6%), more than twice as likely to offer robust cyber security procedures (12% vs 5%) and more than twice as likely to leverage robo-advisors or other digital portfolio allocation tools (12% vs 5%). Millennials are also somewhat more likely than Boomers to increase their use of Social Media to attract the next generation of investors (28% vs 22%).
Alternatively, to attract the next generation of investors, Boomer advisors are far 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%), while somewhat more likely to focus on personalized advice for a holistic financial picture (25% vs 19%).
Among the factors that may lead to this digital divide on client acquisition is that Millennials and Boomers also differ on which generation of investor will be their primary target in the next 12 months. Millennial advisors are most likely to target fellow Millennial investors (51%), followed by Generation X (26%), Generation Z (10%) and Baby Boomers (9%). Baby Boomer advisors are most likely to target fellow Baby Boomer investors (47%), followed by Generation X (33%), Millennials (12%) and Generation Z (1%).
Millennial Advisors Tout Tech to Gain Client Insights and Engineer Investing Strategies
Both Millennial and Boomer advisors agree that the number-one way technology helps them to better serve clients over the next 12 months is understanding clients’ current needs and behaviors (30% and 35%). However, Millennials are somewhat more likely than Boomers to say technology helps them deliver better service by analyzing and understanding clients’ expectations (29% vs 19%), protecting client’s 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, Millennials are more than twice as likely as Boomers to use technology to engineer investing strategies for better returns (21% vs 9%). Alternatively, Boomers are far 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%).
When asked which tech enabled solutions will help them to better support clients’ needs over the next 12 months, two generational differences are most prominent. 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.
Millennial and Boomer advisors have more similarities around other types of technology to better support clients’ needs. They agree the number-one solution is financial planning software (23% and 27%), are equally likely to use budgeting and cash management tools (both 17%) and closely aligned around tools for risk management, risk monitoring and portfolio stress testing (20% vs 21%) and tax optimization tools (19% vs 18%). Millennials are somewhat more likely than Boomers to support clients’ needs with mobile websites and/or mobile apps (20% vs 14%), cyber security (20% vs 12%) and real-time data alerts (19% vs 14%). Millennials are somewhat less likely than Boomers to use retirement accumulation tools (16% vs 20%) and retirement income distribution planning tools (15% vs 21%).
The fifth annual Advisor Authority study explores the investing and advising issues confronting RIAs, fee-based advisors and investors—and the innovative techniques that they need to succeed in today’s complex market. These latest findings will be followed by a final special report, to be released in the first quarter of 2020.
About Advisor Authority: Methodology
The fifth annual Advisor Authority Survey was conducted online within the United States by The Harris Poll on behalf of Nationwide Advisory Solutions from February 15 – March 4, 2019 among 1,021 financial advisors and 824 investors, ages 18+. Among the 1,021 financial advisors, there were 507 Registered Investment Advisors and 514 Broker/Dealers, including 622 Millennials, 299 Generation X and 94 Baby Boomers. Advisors are weighted where necessary by employment status and active management to bring them in line with previous years’ profile. Investors are weighted where necessary by age by gender, race/ethnicity, region, education, income, marital status, household size, investable assets and propensity to be online to bring them in line with their actual proportions in the population.
About The Harris Poll
The Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 that is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas; building twenty-first-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visit www.theharrispoll.com.
About Nationwide Advisory Solutions
Nationwide Advisory Solutions is a recognized innovator with a mission to help RIAs and fee-based advisors build their practice by helping their clients to potentially accumulate more wealth and reach their financial goals. Nationwide Advisory Solutions does this by developing and delivering value-added investment products, services and technologies that dovetail with fiduciary obligations—wrapped in an industry-leading customer experience. To learn more, please visit www.nationwideadvisory.com.
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