The COVID-19 pandemic accelerated changes in financial services, forcing the industry to adapt to new demographics and embrace the latest trends. Robert L. Schein, Managing Director, Partner & Chief Investment Officer, Hightower / Blanke Schein Wealth Management, is part of the Inside Wealth/Stack Advisory Board for this September's event, and here reviews how the industry is adapting to the new trends of the times.
Financial professionals are facing two interrelated trend shifts in particular: 1) an increasingly younger client base, and 2) the impetus to create more digital client experience. Effectively adapting to these trends over the next 5-10 years will be crucially important for professionals in financial services.
In March of 2020, the stock market saw its steepest lows in recent memory as the pandemic rocked the market and spooked investors. For market participants, it’s never easy to witness at -40% correction. The March lows, however, had the added effect of spurring a new generation toward professional money management. According to a study from Northern Mutual, about a fifth or more of the respondents among the generations younger than baby boomers said they didn't have an advisor before the pandemic but intend to now seek the advice of one. Specifically, 19% of Gen Xers, 22% of millennials and 22% of Gen Zers said they are now looking for a financial advisor after getting along without one before the pandemic.
The survey also found the U.S. population in general is placing a greater focus on personal finances in response the economic devastation caused by the virus. Among all adults, for example, 15% said they have developed a financial plan after not having one before the coronavirus outbreak. Moreover, 20% of those who did have a financial plan before the pandemic said they are now revisiting the plan in response to the crisis
While the past year and a half has a tremendously trying time, the rise in action from millennials and Gen Z to take more control over their financial future points to a brighter future for the American economy. The sentiment among younger generations is clearly focused on emerging from the pandemic stronger, and in a better financial position than pre-COVID.
And with this younger demographic comes with it the next great trend shift: the shift to digital client experiences. Younger generations are much more digitally savvy than their older counterparts. Put plainly, prospective clients are looking for simple, trustworthy experiences from financial institutions, and businesses that become early adopters on this issue will outperform their peers.
And beyond quality of life improvements that digital technology can give clients, there are real benefits to advisors that come from digitally producing client communications. Advisors who based their entire practice on face-to-face interactions are now being forced to play catch-up to firms that embraced digital communication.
Digital communication and media have created entirely new avenues for advisors to grow their practices. Blogs, podcasts, and YouTube videos have quickly become mainstays of firms growing their digital footprint. Digital communication also has the added benefit of being able to be consumed on mobile devices. This allows businesses to meet their clients on their own terms. Whether clients are at home, out running errands, or traveling on vacation, digital business practices allow for scale and flexibility.
To be competitive throughout the pandemic and after it, building a customer-focused, digital-first institution is a must. For businesses in financial services looking to grow their market share of younger clients, focusing on leveraging technology and produce simple, digital solutions that “just work” will be a key driver of client growth.
Find out more about Inside Wealth/Stack, and the key trends being discussed on this year's agenda >>