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Technology is changing the investment landscape, but to what extent? According to George, “The assumption is that older investors would rather stay away from digital tools and apps. But, at this point technology has been part of our lives for so long that most people are somewhat comfortable with it. Our research found 4 in 10 respondents saying they used technology to manage finances more during the pandemic than ever before. And that carries through to today. Nevertheless, when it comes to making key decisions people still look for human advice.” The point, he said, is finding the balance between what's good for advice versus what's good for basic access. “A mobile app provides access to your funds; you can monitor a portfolio and even do some trading, but you're not looking for the app to give you advice. This is where engagement with the financial advisor comes. The human supportive part, the element that can’t be replaced by technology, is when a client is looking to make a move or actually talk something out.”
In other words, while there are plenty of financial planning tools out there for advisors and clients alike, there are circumstances that can only be satisfied through human interaction. George offered two examples: “When a client calls to say, ‘I'm nervous about what's going on in Washington,’ or ‘My wife is stricken with cancer, how does that impact us?’ technology is not equipped to offer an opinion or guidance. This is where a human can step in to listen, discuss, and support. What's interesting is that an advisor can use a tool like ChatGBT to test run various responses to different types of questions and consider potential responses. That might help to provide guidance and context, but it's the human that’s out front delivering that advice. I think that's key to remember. The two together offer the biggest uplift.”
George sees three key themes that can drive the acquisition and retention of next-generation clients:
1. The 'great wealth transfer' is here. I think it’s important to create an engagement model for your current and future client base to address wealth transfer. That's the place where the advisor can make a strong inroad with the next generation while generating revenue from current clients.
2. Engage more women. “This is not just about hiring women advisors but serving women who are the breadwinners of their households. This is an area where I think the industry is still behind. I would love to see us get in front of it.”
3. Engage younger clients through education. “I think this is where social media and other electronic tools come in,” said George. “Advisors can use these tools to generate educational content relevant to a younger group. This way, they can see you, follow you, and recognize you as an influential person with information they can use. When the time comes that they have an opportunity to invest, there is a better chance that they will come to you."
You can access the full discussion on The Flexible Advisor, wherever you get your podcasts.