To build trust, young investors expect advisors to safeguard their information, be transparent about fees and performance, and be informed about different products, a new report says.Overearth/iStockPhoto / Getty Images
Wealthy young investors are still interested in professional financial advice, but they want more engagement and partnership from their advisors, with less emphasis on investment management, according to a recent CFA Institute survey.
A report released this week, based on a survey conducted last summer of more than 2,400 investors in six countries, including Canada, found that younger investors with more than $1-million in investable assets want frequent contact with their advisors and financial planning centred around their lives.
“Their expectations for advice, communication, and product choice differ in significant ways from the clients that the current wealth management industry was built to serve,” the report says.
These millennial and Gen Z clients expect to communicate with their advisors through texts, messaging apps and video calls, and more than 70 per cent said they engage with their advisor at least monthly.
“Young investors expect ‘always on’ access to their advisors and the markets. Advisors should consider automation, chatbots, and personalized digital touchpoints to sustain regular contact between in-person meetings,” the report says.
“Offer short, digestible updates, interactive dashboards, and real-time portfolio insights to match the cadence of young investors’ engagement habits,” the report suggests.
Despite rising competition from social media, AI tools and online investment platforms, the report finds that advisors remain the most trusted investment resource. But the competing information is changing their approach.
“The role of the advisor is shifting from gatekeeper of information to curator, validator, and translator of an overwhelming digital landscape,” the report says.
The basis for clients’ trust is also changing. Rather than relying on reputation and interpersonal interactions, young investors expect advisors to safeguard their information, be transparent about fees and performance, and be informed about different products.
In particular, the report says advisors should provide access to private markets, crypto and values-based investment products to meet client preferences.
But helping clients resist the investment trend of the day is also important, particularly as more clients adopt a hybrid investing approach. Many young investors admitted to overconfidence and making decisions based on fear of missing out (FOMO), especially when it came to crypto assets.
“Advisors can add the most value by coaching clients through volatility, emphasizing investment discipline, and grounding decisions in long-term goals rather than online momentum,” the report says.
Prospecting, meanwhile, is increasingly about timing. The survey found that younger investors most often began working with advisors after major life milestones, such as buying a home, starting a family, changing careers or receiving an inheritance.
“Appealing to new clients will require advisors to demonstrate value and expertise during key life events that bring financial goals clearly into focus,” the report says.
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