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December 02, 2019 at 03:33 PM
(Photo: Thinkstock)
Distinct differences exist in the way millennial advisors and their older counterparts employ technology and the types of technology they favor, according to Nationwide Advisory Solutions’ fifth annual Advisor Authority study, released Monday.
Twenty-nine percent of millennial advisors said adding new technology was the most important thing they would do over the next 12 months to bolster their practice’s profitability, compared with 11% of baby boomer advisors who said this.
In addition, 20% of millennial advisors, but only 3% of boomers, said consolidating existing technology was most important to enhance profitability.
“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,” Craig Hawley, head of Nationwide’s annuity distribution, said in a statement.
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Even so, the two groups can learn from each other, Hawley said.
“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.”
The Harris Poll conducted an online survey within the U.S. from Feb. 15 to March 4 among 1,021 financial advisors and 824 investors.
Asked which solutions they were most interested in integrating into their practice over the next 12 months, millennial advisors were much likelier than boomers to choose the following:
- Mobile websites and/or mobile apps: 48% vs 23%
- Tools for risk management, risk monitoring and portfolio stress testing: 46% vs 33%
- Interactive websites and/or client portals: 40% vs 23%
- Artificial Intelligence: 34% vs 17%
- Robo advisors: 22% vs 11%
Next Generation Clientele
Millennials and boomers in the survey differed on the importance of using technology to enhance profitability, but both agreed that adding new clients was the number one way to do so.
For 36% of millennial advisors, the chief factor for enhancing profitability was adding new clients, followed by adding new technology, 29%, and targeting high-net-worth clients, 28%.
In contrast, 55% of boomers said the best route to profitability was adding new clients, 30% said it was adding a younger generation of clients and 28% said it was attracting and retaining clients’ heirs.
Eighty-five percent of millennial advisors reported that they had a strategy to retain clients’ heirs, compared with 64% of boomer advisors, and 71% of millennials said they had changed their marketing strategy to attract a next generation of investors, versus 38% of boomers. 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 were somewhat likelier than boomer advisors to increase their use of mobile technology, more than three times more likely to make enhancements to current websites and/or client portals, more than twice as likely to offer robust cyber security procedures and more than twice as likely to leverage robo-advisors or other digital portfolio allocation tools.
