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Advising the Next Generation; Embrace Technology and Younger Advisors

A recent Fidelity study of 1,200 financial advisors found that younger advisors (in this case <48 year olds) manage on average $8 million more in assets than their older and more-experienced counterparts. Surprising? Not to me. I think it’s incredibly encouraging that we’re finally moving away from a world where experience automatically equals performance, to a new world that echoes that old myth-worthy sentiment of the American Dream, where hard work paired with strong values and a healthy sense of idealism lead to success. In fact, in this case, experience may actually be a barrier for older advisors, as they stubbornly try to hold on to the past, refusing to adopt or even understand the communication methods and mindset of a new generation of clients. And trust me, you don’t want to miss out on this next generation of clients, set to inherit $41 trillion in the largest wealth transfer in history.

However, while many have attributed young advisors’ impressive performance to their use of technology, I believe it ultimately all comes down to relationships. I know this may sound strange to you skeptics out there, but many Millennials still care about real relationships and often prefer face-to-face meetings – to be fair, I’m counting Google-hangout and Skype – to texting or email. Technology is not the end-goal, it’s simply a tool to build relationships more effectively, and an advisor’s ability to leverage this tool proves that he/she understands the world we live in. As an added bonus, just think how much time you can save by meeting your clients on Google-hangout versus traveling from coast to coast?

The most interesting finding from the Fidelity study was that younger advisors receive 3 times more referrals than older advisors. This is not something to gloss over, especially given that 84% of RIA’s believe referrals are the greatest source for growth in their business [TD Ameritrade Survey]. And guess what… referrals are only going to become more important! Millennials are more likely to trust a review from a friend, or even a friend-of-a-friend on Facebook, than an advertisement or other marketing materials (including your sales guys).

So my suggestion to all of you naysayers is to jump on the social media bandwagon and accept that if you don’t, that bandwagon will leave you behind in the dust. More than three-fourths of younger investors believe technology enhances their relationship with financial advisors [Fidelity]. In the end, it’s all about relationships, so don’t miss your chance to start building them – even if it means moving out of your comfort zone.

Here are some suggestions to start embracing these scary new technologies:

  • Instant messaging with advisors to provide support and answer questions whenever and wherever the client needs assistance
  • Mobile application that allows clients to check and manage their accounts on-the-go
  • Virtual meetings using Skype, Google Hangout, Facetime, or Go to Meeting
  • NerdWallet’s “Ask an Advisor” platform, providing advisors with an easy-to-use tool to enhance their online presence and connection wit
  • Finect – a new online social network for Financial Services professionals that allows financial advisors, asset managers, and investors to build their brand and grow their community of clients, partners, and prospects