When it comes to engaging younger clients, Fidelity has unpacked potential concerns of this generation when it comes to seeking advice as well as how they prefer to interact with their adviser.
Australia’s looming $3.5 trillion intergenerational wealth transfer has been described as a crucial opportunity for advisers, with research from Adviser Ratings suggesting 14 per cent of clients are planning to transfer $1 million or more, and 17 per cent intend to transfer $500,000 to $1 million.
Some 46 per cent of advisers globally also feel this represents an existential threat to their business with concerns they will struggle to retain assets from heirs, according to research from Natixis Investment Managers.
This is leading advisers to increasingly nurture relationships with younger generations, sourcing new clients and offering personalised services.
Surveying over 1,000 Australians, including over 600 respondents under the age of 45 described as next-gen investors, Fidelity found advice fees remain a significant hindrance in finding a financial planner.
Affordability is the top concern (50 per cent) among those open to seeking advice, followed by difficulty in finding someone to trust (39 per cent).
Other concerns highlighted by potential clients include finding a reliable adviser (27 per cent), time-consuming (25 per cent), poor service (24 per cent), and lack of transparency (23 per cent).
“Lower fees, trustworthiness and understanding financial goals are the top enticements for those who are not currently advised, across the generations,” the report observed.
It noted next-gen clients are more likely to engage if there is easier access, such as online consultations, compared to Gen X. Access to financial education is also an important consideration for this generation.
“Short summaries, educational material and video tutorials are the most likely content to resonate. Podcasts are notably much more popular among Gen Z and Gen Y compared to Gen X,” the report stated.
Interestingly, the research indicated Gen Zs (18–28 years of age) are most likely to see financial advice as very or extremely appealing and will consider this at 29 years of age, on average, while Gen Y (29–43 years of age) will consider this at 41 years of age, on average.
For next-gen advised clients, their top expectation from advisers is preparation for short- to medium-term goals like starting a family, paying for children’s education, or buying property (42 per cent), followed by tax minimisation (42 per cent) and explaining complex financial concepts in simple terms (41 per cent).
“Comprehensive financial planning is the top requirement across the next generations for tailoring advice to meet their personal needs. This suggests that scaled advice may not always be an effective way to address affordability issues or to help build trust,” the report observed.
Last week, research from Investment Trends also explored a need for advice businesses to offer flexible service models, with over half of potential clients preferring one-off advice to meet their financial needs.
Experience expectations
Looking at what next-gen clients expect from their advice experience, Fidelity’s survey highlighted personalised communications in the form of tailored email campaigns, customised financial reports, or personalised investment recommendations, is the top preference.
These clients voiced a strong preference for customer-centric services like 24/7 customer support and easy-to-use account management tools; interactive planning tools like retirement planning calculators and budgeting and saving tools; and resources like webinars and workshops and financial literacy programs.
Other preferences are digital engagement on social media and apps; integration of technology like artificial intelligence and chatbots; sustainability and ethical investing; and “authentic” brand messaging.
“Top tips for how financial advisers/planners should engage with next-generation clients’ personal needs include transparency, one-on-one consultations as well as proactive and responsive service,” the report suggested.
Transparency emerged paramount when it came to engagement with next-gen clients, with over half (55 per cent) seeking transparency around fees, services, and investment strategies.
The ability for one-on-one consultations (53 per cent) and prompt responses to queries, emerging events, and potential risks and opportunities (39 per cent) were also key considerations.
