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Practice Management > Marketing and Communications > Social Media

5 Ways to Turn Fledgling DIY Investors Into Clients

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Since the start of the pandemic, State Street Global Advisors has “seen a significant number of new investors enter the marketplace,” according to Kelly Ryan, head of independent wealth management.

This increase has been boosted by the growing popularity of fintech platforms like Robinhood, which make it easier for young and other new investors to jump into the market on their own.

Also driving the trend has been the shift to $0 commissions that “started to allow fractional shares to be traded, so now you don’t have to have a significant amount of money to enter the stock market,” Ryan said.

Those factors, along with the pandemic’s dampening effect on discretionary spending and the growing importance of social media influencers, have led to a large number of entrants and a surge in new trading accounts, she explained.

While many new investors don’t have a large level of assets to invest in the markets today, they may in the future. So, “there’s a real opportunity” for advisors to attract young investors now and educate them, Ryan said.

Thus, taking steps to draw these prospective clients is an important way to invest “in the future of your practice,” she added.

Here are three tips from Ryan on how advisory firms should reach out to DIY and other new investors:

1. Encourage them to talk about investing with their families.

When clients and their kids are ready, it is a great idea to educate children about the basics of investing and the money marketplace, according to Ryan.

This includes teaching them terminology: What a margin account is, what an equity is, and “when would you sell something short or why would sell something short?”

2. Let young advisors work with young investors.

Those advisors who are doing this well are often allowing younger advisors on their team work with young clients, Ryan said.

These advisors “can really connect over social or over digital platforms with those younger investors who want to communicate that way,” she said.

3. Have a strong social media presence.

“With younger investors looking for an advisor, the first thing they’re going to do is go to the Internet,” Ryan said.

“They’re going to check your online profile. They’re going to make sure that you have a strong website. They’re probably going to check that you’re on multiple platforms.”

Thus, make sure you have a strong online presence, including a good website and a presence on the major social media platforms.

Two more ways advisors can attract more new investors came from Brandon Oliver, a financial advisor and managing partner at Towson, Maryland-based Oliver Wealth Management, who’s been having some success reaching out to DIY and other new investors.

4. Be patient and don’t rely on your old formula for success.

Echoing Ryan, Oliver noted that many young investors are not going to have a whole lot of money to invest initially.

Don’t depend on your “old way of thinking about things” that may include setting an account minimum or only wanting to work with high-net-worth investors, he said.

“Those are the accounts that pay the bills [and] we all need those accounts,” Oliver conceded.

However, “in many cases, those are the people that are also dying off or distributing from IRAs,” he said. Therefore, “you need young blood to kind of reenergize your practice and you need growers, not just distributors.”

Many young investors will be building a lot of wealth  many of them very quickly  and “it’s an underserved market,” Oliver explained.

Having young investors “doesn’t pay off right now” and you may even lose money right now, he said. “But if you’ve got a viable business and you’ve got a very good practice, it’s going to pay dividends later.”

5. Realize that you can’t help everyone.

Some DIY investors just enjoy handling their investments on their own, and there are also “always going to be people out there that don’t want to pay for anything” among investors, Oliver pointed out.

As a result, “those are folks that we just cannot help,” he said. Be realistic and realize that not all new or DIY investors are going to want or be willing to pay for your help.

See 3 Tips for Advisors to Improve Their Marketing on ThinkAdvisor. 


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