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3 Ways Financial Advisors Can Earn the Trust of Younger Generations

While younger generations are taking finances more seriously than their preceding generations, such as saving for retirement earlier, starting personal finance education earlier, and even investing earlier, there is a disconnect between younger generations and financial professionals. 

Here’s what financial advisors need to know about the new wave of investors’ finance habits, and how they can better connect with them to win future clients.

Younger generations aren’t turning to professionals for finance advice

It’s unsurprising that younger generations aren’t relying as much on finance professionals for investment advice. According to research from Vericast:

  • Less than 1/3 of consumers seek financial advice from professionals such as a bank, credit union, or financial advisor.
  • 34% of Gen Z consumers obtain financial advice from TikTok.
  • 33% of Gen Z consumers obtain financial advice from YouTube. 

Why advisors should care about younger-generation investors 

While most advisors’ clientele and their marketing strategies may not be entirely focused on the younger generations yet, it soon will be.

We’re about to experience one of the largest wealth transfers in history, currently referred to as The Great Transfer. Over the course of the next 25 years, as much as $68 million will be passed down and inherited among 45 million US households. 

Financial advisor connecting with future generation of clients.
Source: Unsplash

Advisors need to earn this new wave of investors’ trust.

3 ways advisors can earn the trust of younger generations: 

1. Provide a positive technology experience.

Recent research from Sinch found that a positive technology experience correlates with securing consumer trust. 

This is especially important when it comes to connecting with generations that are entirely reliant on technology for their day-to-day life. Easy-to-use mobile applications, quick technology processes, and strong security measures should all be top of mind for financial institutions and advisors when it comes to winning new clients.

2. Connect 1:1.

While most transactions are done over the screen nowadays, there is a big opportunity for advisors to be able to connect one-on-one with clients. Even if it’s also over a screen.

Sinch also found most financial institutions have yet to capitalize on 1:1 communication, such as text messaging, with clients.

Text message is a huge area of opportunity for financial advisors to give clients a one-on-one experience, in a quick, easy manner.

3. Offer alternative investments.

The 60/40 portfolio is outdated in the eyes of the younger generations. 

81% of Institutional Investors are planning on increasing their allocation to alternative investments by 2025 (Preqin), already 47% of Gen Z holds crypto, and technology platforms like Gridline, Fundrise, and more are allowing investors to diversify their portfolios without the large sums of money they once required. 

To win clients who are already investing in alternatives, it’s imperative for advisors to have a system in place to help manage them. 

AltExchange’s advisor platform, AdvisorVue, makes managing alternative investments simple for advisors by automating, aggregating, and reporting data on all alternative investments. To learn more, please book a call or schedule a demo.

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