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[Art card: The evolving role of the modern advisor]
Mayank Goradia: In today's episode, we will be exploring the evolving landscape of client expectations and the rise of the next generation of advisors. As end investors seek more than just money management, we will discuss the importance of advisors understanding their client's life goals and aspirations. Different generations have unique expectations from advisors, and we will dive into strategies on how to help meet these diverse demands effectively. Join us as we uncover key insights on how to better connect with clients, exceed expectations, and thrive in this ever changing industry.
I’m Mayank Goradia, head of integrated portfolio construction at Fidelity Investments, and I am on a quest, a quest to help advisors profitably grow their book through the art and science of portfolio construction. With expert insights and groundbreaking research, we’ll embark on a journey where wisdom meets innovation and every choice counts. So join me on The Search for The Next Great Portfolio.
[Art card: The Search for the Next Great Portfolio]
We have seen some really branded, well-known, established companies go out of business because they did not see where the competition was coming from. When you're working with the advisors, do you get that sense from them that they are concerned about it?
Anand Sekhar: So as we think about investors, one of the things that’s really important is that advisors need to do what we term moving up the advice value stack. And when I think about that, we rolled this out back in 2017. At the base of the pyramid of that advice value stack is all about managing the money. You can’t call yourself a financial advisor. That word financial in front of advisor unless you’re managing the money. The next layer is all about achieving goals. Achieving goals includes things like financial planning, includes things about charitable planning, all of those elements of planning to help clients achieve their goals. I think about that next layer as peace of mind. The top of the advice value stack is all about how do you think about fulfillment? And that is leaving a legacy.
And when I think about leaving a legacy, one of the paramount questions that advisors should be dealing with their clients is, how do you think about transferring values, not valuables, multi-generational. And that’s a very different kind of conversation. So it could be as much as helping them determine their philanthropic mission statement versus just understanding perhaps estate plans and trusts. That’s a very deeper conversation and more intimate conversation that I think advisors can aspire to.
[Art card: What next-gen trends do advisors need to understand?]
Megan Kelley: My team is focused on uncovering signals and then building analysis around not just the emerging technology trends, but the sociocultural trends. There are a couple of things that we’ve been recently watching, one of which includes the rise in the family of one. So we’re noticing that more and more Americans are choosing to live in solo households, or choosing this soloist lifestyle.
And what that means, it means that one in seven Americans are currently living alone. What we’re noticing is that younger folks are choosing to live on their own more often. They’re choosing to delay getting married. Many people are choosing not to have children, or perhaps have children later in life. So there’s this very profound shift in how younger people are making choices about what and with whom they live and work.
We think a lot about how the digital experience, the growing up in a digital world has shaped these attitudes. The investors that are growing up now are used to seeking advice from peers, also peers they might not even know. We know that these younger investors are looking for sources of information on platforms that we might not necessarily consider fully professional research services or that that advisor is maybe not hanging out there. So maybe we should have a presence for some of our advisors. We’ve done a lot of thought around what different platforms and experiences, where we should show up and where those advisors should.
[Art card: How do you attract more women investors?]
Jonathan Habbershon: I work within the Fidelity Center for Family Engagement. Our group is entirely focused on families, what they need to be able to transition wealth and assets effectively from one generation to the next, or just from one family member to another. We also spend a lot of time doing research, writing thought leadership pieces, and then once we've sort of focused entirely on the family, we said what do the financial professionals need?
They’re highly involved in these family’s lives day in and day out. They're helping them make some of these really big, complex decisions. What are the skills and capabilities that they need to be able to support those families better? And I think it's coming up more and more as we talk about things like portfolio construction or investment management.
And so if I’m an advisor, and I’m trying to bring those unique worlds to together, my goal should be what are mom and dad’s unique points of view? What are the experiences they have that sort of defined who they are and how they think and then make decisions? Same thing for the kids. And how do we again, bring them together.
[Art card: How do advisors adapt to next-gen investors?]
Megan Kelley: We know that younger investors are interested in having a more personalized experience. And that's obviously digital. We know that they’re interested in other kinds of investing products. The breadth is expanding. So we know that they're interested in alts, for example. They're interested in crypto and they’re interested in direct indexing and maybe not call it direct indexing. But those products that are able to be customized and tuned to their experiences. And they’re used to that because that’s how they grew up. And many times some of the emerging technologies could, I think, really help with this, in which you’re more able to envision a potential future. So there are all sorts of tools that you could again, tune or customize to show an experience, or to show a picture or build a photo that incorporates things that they’re thinking about in your marketing materials, or build into aspirational materials with them. And you can use some of the generative tools to do that now on your own, which I think is really interesting.
[Art card: What new factors should a next-gen advisor consider?]
Jonathan Habbershon: How do I now connect with a group of people that aren’t necessarily under Mom and Dad’s roof and are making their own decisions and going their own way, that is now trying to understand their unique perspective. What do they want out of life? Too often I find that when I’m talking with advisors, they say, I’ll go to the client’s kids and I'll say, hey, I work with your mom and dad. And they asked me to speak to you.
Speaking as a next generation person, that kind of feels lousy, simply because I don't want to be a favor that you’re doing on behalf of my mom and dad, just because they happen to work with you. I have my own financial aspirations that my wife and I talk about. I kind of fit the perfect mold for our use case from a next generation standpoint, meaning my kids are younger, I have Baby Boomer parents, I have Baby Boomer in-laws.
My wife and we work, we save, we invest on our own. We may not necessarily be the most profitable client today, but again, we kind of fit the mold. And so again, I don't want to be engaged as if I’m some sort of second thought favor. I have my own unique aspirations and wishes. Could you seek to understand them?
So when I’m speaking with advisors, I say, listen, when you go into a next generation conversation, treat it like you're doing a brand new prospect meeting. Get to know them in all of the unique ways that kind of drive their lives. Building greater relationship capabilities creates a level of stickiness with that client. They don’t want to leave you because now you’re not just a person that offers them occasional financial advice. You're a human being.
As much as you get to know them, they get to know you. You have a spouse of your own, your own kids, your own business aspirations, and those sorts of things. And so you build this immense relationship that actually helps reduce the times in which they decide to leave and go somewhere else. So big picture starting early, you want to understand what is an individual's unique wish?
It’s vastly different than just a goal. It’s highly aspirational. That then allows you to establish a set of principles that you can then set every decision up against after that. So if this is my wish and my goal is to offer my children a beautiful life after I’m gone or I’m going to use my wealth in such a way that allows them to come together and be connected. That means that every decision that I’m going to make in my estate planning process, I’m going to make sure it feeds that.
Mayank Goradia: Thank you for tuning in to today’s episode, where we learned changes in investor behavior and preferences, coupled with innovations in technology, indicate the wealth management industry is evolving quicker than ever before. To deliver the desired experience and help meet investor expectations, advisors need access to portfolio construction tools, emerging trends, and right fit investment products. These are critical factors to increase trust and productivity to help successfully manage their clients' expectations, all while growing their business. Until next time, keep evolving and stay ahead.Next time on The Search for the Next Great Portfolio.
Anand Sekhar: So one of the things that I think from a growth perspective, structurally, that firms need to wake up to is go younger, especially Gen X right now.
Interviewee 1: But that younger generation, they actually care more about having a plan and achieving goals. They actually care more about peace of mind.
Interviewee 2: If your client is sort of getting on in years and getting close to retirement and there are adult children involved, it makes sense, in my opinion, to begin to develop a relationship with those adult children, include them in a meeting, meet them, find out what their needs are. How much education do they have? What do they do for a living? What are their goals and dreams and ambitions?
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