Personal finance

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The financial uncertainty created by the global pandemic has made an impact on Americans of all generations and income levels.

Even as the economy starts to show signs of recovery, too many Americans are still unemployed, and the uncertainty over the shape of economic recovery lingers. For some, that is translating to concerns around whether a secure retirement will be possible. For others, it is causing anxiety about the attainability of basic financial goals, such as buying a new home or sending a child to college.

And for many younger Americans, it is raising questions about the impact of the pandemic on their lifetime earnings potential and what that means for their longer-term financial security.

These concerns are driving unprecedented interest in financial markets and advice. A growing number of self-directed, first-time investors are entering the market with the hopes of putting their assets — and time — to work and getting an early start in the investing world.

Meanwhile, the oldest millennials are reaching their 40s, entering an era of critical life decisions. Having already gone through two recessions, anxiety runs high among this group of investors, who are increasingly turning to professional help to manage their finances.

Yet, as this new generation of investors begins to seek financial advice, their behaviors and needs couldn’t be more different than previous ones.

In order to seize this opportunity and turn investor interest into actual relationships, advisors will need to rethink how they conduct business, adopt a digital-first mindset and, perhaps most importantly, become masterful at blending technology with human touch.

Enhance online presence and branding: For a significant majority of younger investors, the search for a financial advisor begins online. In fact, 73% of those under 40 say that they rely on a Google search to find an advisor, while 52% say they use LinkedIn. Further, consumers increasingly make buying decisions online, without ever talking to a real person, mostly purely based on online reviews.

An active social and digital presence are considered baseline for getting in front of these investors. Layered on top of a strong online presence, paid strategies such as search engine marketing and social media advertising can be hugely impactful in reaching and marketing to this group.

That said, millennials don’t want to be just sold services.

They want to know what you stand for. In fact, a whopping 83% of millennials say they would be more loyal to a company that helps them contribute to social and environmental issues. To appeal to this group, advisors need to be clear about their brand purpose and values, as well as differentiators. They must live and breathe those values at every client touch point — on and offline.

Engage and collaborate: The next generation of investors are not looking to delegate management of their investments to an advisor and walk away — only to come back for quarterly check-ins.

They want information to be delivered to them on a regular basis. They expect their advisors to communicate with them on social and digital platforms and prefer a more informal style. They want their advisors not just to guide them on financial decisions, but also on critical life decisions.

For them, the client-advisor relationship is about collaboration and the experience, not just about investment performance. And they increasingly want that experience to be unique, personal and digital all at the same time.

Blend technology with human touch: For a generation of digital natives, the lines between the physical and digital worlds are increasingly blurred. For them, a digital-first experience, delivered via a sleek set of tools — whether that’s digital advice and planning, or digital assistants or web chats — that empower their early investing journey are non-negotiables. Just as important is the advisors’ ability to transition in and out of the digital world in response to their evolving needs, particularly as their financial lives get more complex.

The good news is that technology, such as data analytics and artificial intelligence, are increasingly helping advisors get ahead of client needs by detecting patterns and predicting major life events. This includes a marriage, a home purchase, the birth of a child, etc., thus enabling more meaningful and highly personalized conversations at key decision points. Advisors must embrace new technology and make them an organic part of their offering.

Play the long game: Many of these investors are entering the critical asset-accumulation phase in an era where there’s hardly been more complexity in navigating key financial decisions. Advisors who are there to help them get through this era of complexity will be the ones to win their trust and loyalty in the long run. However, playing the long game will require rethinking the old ways of doing business.

It will require a more flexible and innovative approach to fees. In fact, we see the traditional product- or asset-under-management-based fee models moving toward an experience-based model, where speed, convenience and putting the right information at the tip of clients’ fingers — at the right time through the right channel — all become inextricably linked to the value of an advisor.

As advisors adapt to these new realities, one thing that’s very clear is that investors of all stripes are now more concerned about their future financial wellbeing and are putting new premiums on financial preparedness.

It is up to financial advisors to reinvent their thinking and approach to business to help the next generation of investors build better, more secure financial futures.

— By Ben Harrison, head of advisor solutions at BNY Mellon’s Pershing

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