Many advisors in the U.S. have found success in segmenting their service strategy across demographic lines, allowing them to target certain communication strategies and products to different groups despite the pandemic.
According to a report entitled The state of North American retail wealth management, which includes information from more than 70,000 financial advisors, clients born after 1965 (predominantly generations X and Y) represent a growing and substantial part of the wealth-management client base. These “next gen” clients now represent 24 per cent of wealth-management clients, up from 19 per cent in 2016.
New-client age dropping
Advisors are choosing to work with a greater number of younger clients, an accelerant to the overall change in client-demographic composition. Average new-client age dropped from 57.5 in 2019 to 56.4 in 2020, the largest single-year decline, said the report.
Adding younger clients, while critical to future advisor growth, will be an increasingly challenging endeavor, noted the report. While new client acquisition rates for full-service advisors were stagnant, technology-led wealth platforms experienced significant new account growth last year. Many investors start out as “self directed” and switch to human advisors as their needs become more complex, “but with online offerings becoming more sophisticated and adding additional service options, enticing clients to switch may become a taller order.”
