The financial advice industry has felt pressures from factors like industry regulation and robo-advice. With increased competition comes the panic of how to differentiate messaging, offer a unique value proposition, and, ultimately, how to attract and retain clients.
For financial advisors, the future of their practice lies with Millennials. With an estimated $30 trillion in wealth set to transfer to Millennials within the next few decades, the pressure is on to appeal to the largest cohort in the United States.
Many financial advice experts claim that the next generation of investors want digitized robo-advice. However, contrary to this belief, the majority of Millennials do not want robo-advice; what they really want is your service.
For Millennials, robo-advice is not the answer
Millennials are closely associated with technology, as they themselves even indicated that their use of technology is the defining aspect of their generation. However, this enthusiasm for — and innate attraction to — technology does not equate with a completely positive outlook on its use.
According to a recent survey from LendEDU, 62 percent of Millennials did not know what a robo-advisor is. In addition, over 62 percent indicated that they believed robo-advisors were more likely to lose money than human advisors. Millennials also believed by a large margin that human advisors would net them a better return on their investments than a robo-advisor.
In a somewhat surprising result, Millennials favor human advice over technological advice, in both personal preference and in the perceived performance of their investments. So what does this mean for advisors looking to appeal to the next great generation of investors?
A continued emphasis on human advice
Personalization is timeless. Human communication and interpersonal relationships will always be vital to businesses. Even though robo-advice is dominating headlines and remains a focal point in think-pieces about the financial services industry, nothing will ever truly replace the human element of advice delivery.
Discrediting the human element is actually counterintuitive when looking to attract Millennial clients, especially the lucrative high-earning-not-rich-yet demographic. Though digitized advice is becoming more commonplace, human advice still reigns supreme in the eyes of the consumer — even tech-savvy Millennials.
Using this to your advantage
According to the LendEDU survey, the reason why Millennials prefer working with human advisors is because they “made it easy to get started.” In your own firm, find ways to ease customer onboarding. In doing so, you will cater directly to what your clients are looking for: an easy point of entry and a personalized touch for their own financial picture.
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