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March 25, 2015 at 02:41 PM
Following the financial crisis, most — if not all — advisory firms were focused on getting back to profitability and so set their sights on high-net-worth clients, leaving a void in the mass affluent market that technology startups — robo-advisors — were able to fill, according to a report published in March by Aite and Scivantage.
However, some HNW clients like what those tech providers have to offer, too. The report, “The Race to Easy: Reevaluating the Wealth Management Technology Strategy,” found 30% of assets managed by online wealth manager Personal Capital are from HNW investors.
Millennials and Gen X are the most likely targets of advisory firms’ digital efforts. They’re also more likely to use multiple channels for financial advice, including self-help books and websites like Motley Fool or Mint.com. They were more likely to call financial TV shows helpful, but the report found boomers also find these shows helpful (40% versus 26%).
Among consumers who already work with an advisor, Gen X and Y investors were more likely than boomers to list better technology among their top three unmet financial needs. However, the report noted that boomers typically have more complex financial situations than younger investors. Their top unmet need was more structure in their financial lives. Firms might get more out of the tech tools they create to appeal to younger investors by also making them user-friendly to appeal to boomers.
Sophie Schmitt, a senior analyst at Aite Group, urged advisors to evaluate how they can supplement their services with digital offerings to attract younger clients with growing assets, but also to retain older, wealthier clients who have grown used to certain level of access to their online accounts.
“The emergence of Gen X and Gen Y investors requires firms to launch new service models that blend high-tech and advisor service,” Schmitt said in a statement. “Evaluating how digital technologies complement and enable existing advisor services should be a priority for firms to ensure they remain competitive over the long term while they continue to meet the needs of existing clients who now expect self-service tools and digital access to their wealth management information.”
