Lessons from T3

Right now is an exciting time to be in the wealth management space. A radical generational shift from Baby Boomers at or nearing retirement to younger demographics moving into their top income generating years is currently underway. This has led to revised thinking among advisors about the best methods of interacting with this new generation. To achieve success moving forward, advisors may want to understand the motivations and goals of these perspective clients. The new wave of clients seek to be more hands on, preferring to collaborate with their advisor rather than hire somebody to tell them when and where to invest their money. It has been found that one of the surest ways to attract and retain this new generation of client is by introducing interactive technology to the advisor-client relationship, which allows clients to actively contribute to the management of their wealth.

Cam Marston, of Generational Insights, highlights the crux of the issue: “Everyone sees the world through his or her own generational filter.” Baby Boomers, on the one hand, planned for their future in an era of relative stock market stability and a world not inundated by technology. Thus, a strong relationship (i.e., trust) took primacy in choosing who would manage their wealth. Younger generations appear to have their thinking on retirement and financial markets shaped by the relative tumult of the past two decades. Consequently, Generation X and Millennials are more active, adventurous and aggressive in their investing strategies. (See Fidelity’s Millionaire Outlook study). They are eager to do more with their money and want an advisor who is a partner, more so than a passive asset manager.

The contrast between Baby Boomers and younger generations can also be seen in their use of technology. Baby Boomers, while steadily increasing in their use, did not grow up in a world of instant internet access via phone, computer or tablet. Gen X-ers, in comparison, grew up during and contributed to, the advent of personal computers and the Internet, becoming the first ‘tech-savvy’ generation. Far surpassing the moniker of being merely tech-savvy, Millennials may not be able to imagine a world without computers. They are constantly interconnected via technology and use social media to broadcast their life to the world. As a consequence, trust, alone, may no longer be sufficient to build a solid client base. These new clients want a personalized experience. They already use technology to express themselves. Now, they seek an advisor who is willing to leverage technology to customize their experience according to their preferences. Older methods of attracting and maintaining clients may be entering retirement with the Baby Boomers, as it becomes apparent that the new generation comes with new expectations.

The new generation of clients may look to separate the advisory wheat from the chaff on the basis of their technology and the “feel” of their practice. While these clients want a personalized experience, they prefer less frequent face-to-face communication. However, according to Morgan Stanley, 91% of people keep their smartphone within three feet of them 24 hours a day, 365 days out of the year enabling access to information and communication channels at all times. Essentially, today’s clients want access to information on their own terms, in a format they can easily understand, from their computer, tablet, or mobile phone. They want access to all of their information, not just the select data their advisor allows them to view. They want a complete picture of their financial position at any given time, not just the portion a given advisor is managing. They want their other advisors (e.g., lawyers/accountants/consultants) to have instant access to sensitive documents whenever necessary. They want their advisor to be intimately aware of their investment goals and financial milestones, and to actively assist them in achieving those. In short, they want more.

Technology Tools for Today (T3) 2014, which took place February 10-12 at the Anaheim Hilton, showcased a number of such technologies already flooding the market, and even more waiting on the horizon. It is of crucial importance for advisors to identify which of these products add the most value to their practice and quickly integrate the technology into their existing and future relationships. Time is of the essence.