It’s time for many technophobic 50-something financial pros to look for another job.
That’s because millennials, many of whom are about to inherit considerable assets, are not looking for a sit-down meeting in a downtown office to discuss investment options.
You need to reach them on their ubiquitous mobile devices, which means they are gravitating to financial technology (FinTech) companies, financial services executives say.
Advisers, they warn, risk missing out on the technological revolution affecting their clients and their children, who are expected to inherit trillions of dollars over the next generation despite the slowdown in the economy.
Change has always been a factor with investing, but its pace now threatens to destroy some slow-moving companies and professionals, says an innovation expert.
“Before, change was happening, but it was generational. You could adjust to it. And a business model was, in essence, immortal,” says Bill Hortz, founder of the Institute for
Innovation Development. In the 1950s, he noted, the average company stayed in the S&P 500 for 75 years.
“Today it is 14 years and dropping rapidly,” he says. Change is feeding on itself, and the effects of analytics and artificial intelligence will be expanding. They will dramatically change “client experiences and client interfaces,” Hortz says.
“If they don’t serve [the millennials], they will leave and take the assets with them,” warns Brandon Krieg, one of the founders of Stash Invest.
A recent report highlights why millennials will stop using their parents’ advisers.
The new client has expectations of “24/7 access to information that is readily available via a smartphone, tablet or computer. Financial issues and questions that once required the advice of a certified professional can now be answered with a click on any digitally enabled device,” according to “The Advisor of the Future,” a 2015 report by Hearsay Social, a company that advises financial firms.
The report also cited Forrester Research data predicting that half of all retail transactions would be influenced by the Web as of this year.
This represents “a potential sales opportunity of almost $2 trillion,” the report said. “In addition, customers will soon be able to search for products via additional technologies, including voice and gesture commands.”
But many financial professionals aren’t keeping up with these changing ways of selling to the next generation.
“Advisers are often between the ages of 52 and 56, and when you ask them about their mobile strategy, they often don’t understand,” says Jeremy Floyd, president of BPV Capital Management.
“They’ll say that you can reach them from 8 to 5 each business day on their landlines. They don’t even talk about mobile phones,” Floyd complains.
Yet today, the new generation of clients do everything on their favorite mobile devices, including investing, banking and portfolio analysis, according to FinTech executives.
Krieg, a former trader, founded Stash Invest because he believes that Wall Street fails young investors as well as those not knowing how to begin saving and investing.
“We want to help those underserved by the industry get started,” Krieg says.
So Stash, which conducts all business with clients through mobile devices, has very small minimums. An account can be opened with $5.
“What’s more important isn’t the initial amount, but that someone makes a commitment to invest on a regular basis,” he says.
How can advisers serve these younger clients who grew up using the net? They need their products and services to be easily available.
“More and more clients need a digital and mobile offering that they can adjust on the fly. Investors want to see their portfolios when they want and where they want,” says Jason Raznick, co-founder of.
“They need an easy way to communicate with advisers, be it on the computer or text messaging,” Raznick says. “They need to see visuals on how investing is more lucrative with an adviser as opposed to an automated solution.”