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Paul Bayliss: Better technology is the key to attracting younger clients

Successful advice businesses share a number of characteristics, the first of which, and most important, is a clear proposition. They have identified who they serve and formed a clear definition of future success for their business. 

This is much more than a minimum asset size or associated segmentation and includes what a firm wants to be known for and what its optimal clients look like and firms should use this to inform all decisions relating to client experience, marketing, technology and people.

Unfortunately, it is still rare to find total clarity of positioning among UK advisers. All use variations of similar terms to describe what they do: financial planner, wealth manager and so on. I often ask firms to articulate how they think their staff and clients describe what they do; it generally proves to be a difficult question to answer.

This absence of clear positioning is obvious from adviser websites, where the first tab or home page is invariably not about you (the client) but “about us” (the firm) and follows a set format: number of years’ experience, professional qualifications and products advised on. This is then translated to all elements of marketing and the client experience, making it very difficult for clients to discern any differences and understand if the service and solutions provided are really suitable for them.

Technology experience

Most advisers are at a disadvantage when it comes to providing real-time information through multimedia devices and other digital technologies. Providers’ technology is often several steps behind the day-to-day technology experience and expectations of consumers.

Our research shows that advice firms rate mobile access as a top-five spending priority over the coming year. The benefits are clear: advisers can meet clients any time, anywhere and provide immediate answers to important financial questions.

Immediate access offers the ability to provide more robust and holistic information about the client’s financial position and progression towards goals. Tools such as CRM, remote access and eDocuments allow an adviser to paint a clear picture and act quickly on decisions made during client meetings.

With this additional level of client service, many advisers experience an increase in both wallet share and “stickiness” as they exceed client expectations. However, advice firms which see execution-only or guided advice as a way to attract new business will face challenges from the flurry of banks and other institutions launching post-RDR investment propositions. 

These offerings will include integrated banking solutions and will, through size and scale, be able to attract the lowest-cost investment and product fees.

The good news is that advice firms which have developed a clear position, a defined target market and a client-centric value proposition will be very hard to compete with.

The profile of clients served by a firm should have a direct correlation to the way it develops its marketing and communication model. Most firms have historically focused on the over-50 baby boomers, who
tend to prefer traditional methods of communication, in particular face-to-face advice.

It is not sensible to spend a large amount of effort developing a Facebook or Twitter presence if these are mediums not commonly used by your target client base. If you serve City professionals, however, creating a LinkedIn group can be an excellent way to communicate.

Increasing attention needs to be paid to the needs and expectations of Generations X and Y. They tend to be less satisfied with their current adviser and, if they inherit wealth from their parents, rarely keep those assets with their parents’ adviser.

The assets and influence of these investors are increasing year by year, making them an essential market for advisers who want to position their firm for long-term growth and success. Advisers should ask themselves how well they know the children and grandchildren of existing clients. Have they made successful careers of their own? If they are in or entering their high-earning years, creating an effective engagement strategy is essential.

Strong DIY attitude

The digital age has delivered an unprecedented level of information to these generations. Most use web-based tools, electronic commu-nication and real-time messaging daily, obtaining information when they need it. This has spawned a strong DIY attitude and a frustration with complicated communications. 

Technology has also created cynicism as it enables people to claim expertise in a range of fields. Their mistrust of intermediaries often motivates them to validate their ideas with more trusted (though not necessarily better equipped) individuals such as friends and family.

Soon many of these individuals will reach a point in their life where financial matters become increasingly complex and the need for support becomes more acute. This offers significant opportunities for advice firms that can overcome the trust gap and position themselves as a valuable resource and straight-talking counsellor.

 Advice firms looking to serve these generations should remember: 

1) A smart office does not impress Generations X and Y as much as a dynamic website with easy access to personalised information which is all about them and what they can do – not about the advice firm.

2)  Off the shelf newsletters will turn off Generations X and Y. Customised, insightful communications work best.

3) Consider bringing younger advisers into the team, they are best positioned to understand Generations X and Y.

Paul Bayliss is head of strategy at Pershing Limited

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