Advisors who aren't stepping up their game by using social media, video and other technology, and aren't reaching out to appeal to younger investors, especially high-net-worth millennials, are in danger of becoming the next Blockbuster, according to Samantha Russell, chief evangelist at FMG Suite and chief marketing and business development officer at Twenty Over Ten.
Advisors should also be open to changing their fee models to appeal to HNW millennials and other new investors, she said.
In a Q&A with ThinkAdvisor, the digital marketing expert talked about those and other industry trends to which advisors need to pay close attention.
THINKADVISOR: What are the top one or two concerns of your clients and/or the industry right now and why?
SAMANTHA RUSSELL: Even though there are many concerns wealth management firms are dealing with right now — the commoditization of wealth management, increased pressure to lower fees and be more fee-transparent, the rise of robo-advisors/DIY investing, the shift in how investors find an advisor in the first place — all these concerns really come back to one thing: shifting demographics and increased technology.
Younger investors are more savvy and likely to shop around (and better able to inform themselves via online information), and the number of HNW millennials and women is growing at a fast clip. According to a 2020 report by Capgemini, HNW clients are expected to transfer around $68 trillion within the next 20-25 years to their heirs, and 80%(!) of those heirs are likely to change firms after inheriting their parents' wealth. That's just a tremendous amount of money ready to change hands.
Add to that the commoditization of investment management, as well as the increasing comfort that each generation has with technology, and all of a sudden there is much more pressing need for financial advisory firms to demonstrate value.
What's your top piece of advice about those concerns?
The quickest way to become the next Blockbuster is to build for the future by focusing on what's worked in the past. The firms that will benefit from this demographic shift will be the ones who are forward-looking.
What shifts are just too big and important to ignore? Where are your clients and prospective clients getting their information? Where do they spend time online? What do they want that you just aren't offering? Pay attention to what information they are consuming, so that you can speak/write to address it. Be where they spend time online (YouTube, social media, blogs, etc.) so that your firm stays top of mind and part of the conversation. And constantly be reevaluating and reinventing your offerings to keep up.
For instance, many of the firms we work with have started implementing new fee models (such as subscription or flat-fee models for financial planning), and one firm I know offers free financial planning to all of their clients' children until they turn 26 (to coincide with insurance). Talk about a great strategy to stay in front of the "Great Wealth Transfer"!
Another new strategy that many firms we work with started this year is sending clients emails that contain a short video update instead of requiring clients to join yet another Zoom meeting.
Others may not be able to offer digital assets such as Bitcoin, but because they know their clients are incredibly interested in them, they are creating content around them and proactively talking to clients about this new frontier, discussing both the pros and the cons.
What's the top trend or theme you're following and/or writing about this year and why?
Following: digital assets (crypto, NFTs, Bitcoin, Dogecoin, etc.). It's been fascinating to watch as we've gone from all the big players in the industry completely ruling these assets out as "a fad" just a year or two ago to seeing news in recent weeks that everyone from Goldman Sachs to Morgan Stanley to Visa, PayPal and Venmo are announcing new forays into crypto.
