Apps, AI, and accessibility: Engaging the next gen of advisers

With the intergenerational wealth transfer underway in Australia, wealth management firms are focusing both on attracting the next generation of clients and the next generation of advisers to service them.

It has been much discussed that the younger generation of clients is unlikely to maintain their parents’ advisers, so firms are working on how they can engage them. 

However, these firms simultaneously need to decide how their firms will be an attractive target for the younger advisers entering the industry if they are meet this demand.

Commentary from Capgemini earlier this year found not only do younger, next generation clients “pose a flight risk”, but also younger advisers present the same challenge if their firms fail to keep up to speed with technology. 

This report found one in three advisers expressed dissatisfaction with their firm’s digital capabilities, which they felt was 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.

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Discussing with Money Management what younger advisers are seeking, Kristen Bell, president of Focus Partners Australia, said: “Their technology savviness is really different and there is a strong expectation they will have all the information at their fingertips. We are having to think about different ways to engage and connect with that younger generation in a way that makes sense to them.

“Any firm that is not embracing digital platforms and the ability to pick up your phone and see how your portfolio is tracking will be left behind. Your flexibility in the workplace is absolutely necessary, creating those digital means for people to be able to work anywhere at any time is really important.

“We’re really focused on not only how do we attract younger advisers and those coming out of university and doing their professional year, but how do we structure the business in such a way that gives them the savviness they are expecting? Gone are the days when you could hand them a laptop and say ‘off you go’, now it’s about apps on your phone, it’s about AI, it’s about accessibility.”

From a private wealth perspective, Ben James, CEO of Escala Partners – which is also part of the Focus network – told Money Management the firm is already taking on advisers on their professional year and passing on younger clients to work with its younger advisers. 

“Life is replicated in an advice business because you’ve got older advisers who have been advising clients forever but half the team are in their 20s and they’re already beginning to talk to our younger clients. It's 100 per cent a conscious decision we've taken to have younger advisers talking to the younger clients,” James said.

“We’re transitioning business to the next generation because we want to give them a career path and we want to train them up and introduce them to clients early.”

According to Natixis IM, nearly half of financial advisers worldwide view the great wealth transfer as an existential threat to their business, emphasising the need for client retention strategies. Meanwhile, some 43 per cent are concerned they will not retain assets from clients’ spouses or next-generation heirs.

Respondents to the Natixis Investment Managers’ 2024 Global Survey of Financial Professionals stated that they retain client relationships 72 per cent of the time when a spouse inherits assets from the former client. However, when a client’s children inherit, advisers are successful only half of the time.

“Nothing is guaranteed, as one-third of advisers report that they’ve lost significant assets through generational attrition,” the report said.