Financial advice practices need to combine both their professional skills and credibility with digital access if they wish to compete with finfluencers for younger clients.
With the intergenerational wealth transfer in full swing, advice firms and wealth managers are now considering how they can best access this next generation.
But one potential threat affecting their business, as well as their aversion to using their parents’ adviser, is the popularity of finfluencers.
Research by Capital Group found women are twice as likely to seek investment guidance from social media and ‘finfluencers’ over a professional adviser. Some 27 per cent of women said they would seek advice from these sources, compared to 15 per cent of men.
Adviser Ratings said this finding highlights the need for advice firms to improve their digital client experience, simultaneously emphasising their trustworthiness and professionalism. While finfluencers are popular, the research house said they lack formal qualification and regulatory oversight, which can run the risk of misinformation, providing a differentiator for advice firms to capitalise on.
Those firms that are utilising digital marketing channels already, it said, are seeing a 56 per cent increase in client acquisition, and digital channels now generate new clients for 25 per cent of practices, up from 16 per cent in the previous year’s survey. Meanwhile, tech-savvy practices achieve profit margins of up to 40 per cent, compared to 18 per cent for those with less of a digital presence, and operate with 55 per cent fewer staff per adviser.
“The competitive landscape between finfluencers and traditional advisers is not about choosing between professional credibility and digital accessibility – it is about combining both effectively. Practices successfully integrating digital marketing with professional expertise achieve superior business outcomes while better serving client needs,” it said.
“Practices that delay digital integration risk losing market share to both finfluencers and more digitally savvy competitors. However, advisers who implement strategic digital marketing while maintaining professional standards can build sustainable competitive advantages that benefit both their practices and their clients.”
Adviser Ratings recommended ideas such as educational storytelling, incorporating video content, using AI tools, values-based positioning focused on consumer values, and interactive digital experiences and Q&As.
“While finfluencers capture attention through accessibility and relatability, they cannot provide comprehensive financial planning, regulatory protection, or fiduciary responsibility. Professional advisers who combine digital accessibility with regulatory credibility position themselves to capture both immediate consumer interest and long-term client relationships,” it said.
Not only can a greater technology and digital presence help firms obtain new clients, but it can also help retain advisers, especially younger ones. Research by Capgemini earlier this year found wealth and advice firms face a ‘flight risk’ of younger advisers who are dissatisfied with their firm’s digital presence.
One-in-three advisers expressed dissatisfaction with their firm’s digital capabilities, which they feel is impacting their productivity. Manual processes impeded client service and increased the rate of errors, they said, while others felt unable to connect with clients via digital channels or use digital tools such as portfolio tracking and analytics.
