How to overcome the challenges of engaging the next generation – Part 1
One of the key takeaways from Schroders UK Financial Adviser Survey 2021, published in November 2021, is that intergenerational wealth planning is one of the top challenges advisers face in 2022.
According to the survey, 74% of advisers believe wealth transfer between generations is an opportunity for their business.
However, the stats show a worrying disconnect between the concern over intergenerational wealth planning and positive actions being taken to address the problems that advisers face in attracting business from younger generations.
Only 30% of advisers are addressing the issue
When it comes to engagement, only one in three advisers has a specific proposition for addressing the transfer of family wealth to the next generation.
The percentage of advisers willing to accept new clients with less than £50,000 continues to decline. Only 39% of advisers will accept new clients with less than £50,000.
This means that advisers are losing the next generation when they inherit their parents’ £250,000+ wealth since they have no relationship with the adviser.
The average age of adviser firms’ client base continues to climb
71% of advisers report having a client bank of people between the ages of 51-64, an increase from 64% in 2020.
Only 21% of firms have a sales and marketing strategy aimed at younger investors
On top of this, only 21% of advisers have a sales and marketing strategy aimed at attracting younger investors. And the number of firms differentiating their marketing to purposely target younger investors has shown no significant change in the last three years.
The chart below shows the response when participants were asked if they have a differentiated sales and marketing strategy for younger investors.
Speaking on behalf of Schroders, Gillian Hepburn, head of UK intermediary solutions, said:
“The increase in the focus on generational planning and exit strategies as we move into 2022 is fascinating and there are many reasons why this might be the case…
“However, if advisers can’t demonstrate a connection to the next generation, then a lack of wealth transfer or indeed a wealth retention strategy could cause some challenges with business valuations at the point of sale.
“Only one in five of advisers identified the rise of younger generations investing in bitcoin and crypto as a threat to their business. This is an interesting view; there is a generation that is engaging in investing, but perhaps not in a ‘traditional way,’ and an ongoing lack of engagement from advisers with the very generation who will inherit wealth (and in some cases already inheriting). This could result in the next generation choosing an online or hybrid advice solution when they inherit wealth, rather than using their parents’ adviser.”
One solution is to offer hybrid advice, but there is more you can do
As Hepburn highlights, one way to engage the next generation is through offering hybrid advice. Another important consideration is how you are using tech and providing client-facing tech solutions to enhance your advice service.
Next month, find out practical ways you can actively address the needs of the next generation.
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If you want to find out how AdviceBridge can help you deliver the service the next generation expects, please get in touch. Email firstname.lastname@example.org or call us on 020 3925 3850.