Tech Key to Reach Next Generation

Technology now touches nearly every aspect of an adviser's practice, from relationship management and client retention to communication, referrals and client interaction.

When it comes to establishing relationships with the children of Baby Boomer clients, proper use of technology is key, said members of a panel on best practices for advisers who want to connect with younger generations of investors. Speaking at the Money Management Institute conference in New York on Tuesday, panelists agreed that the needs of younger clients are different from those of their parents, and the ways they seek advice and financial information also diverge from those of the Boomers.

“Technology has become such an important driver across all of corporate America,” says David Berkowitz, president of Lincoln Financial Network. “The impact has been really transformative. We’re not immune from how technology has the potential to change the way we deliver advice.”

Eli Broverman, co-founder and chief operating officer of Betterment LLC, an online adviser, pointed out that the firm’s clients are mostly in their 30s (the median client age is 35), so their concern is more focused on attracting that client base for now, rather than reaching out to the next generation of wealth holders. “Our approach is strictly based on technology,” Broverman says. “Digital means is clearly the way investing is going to move forward in the future.”

The percentage of people who bank online, for instance, rises every year. Broverman cited statistics that put the percentage at four out of five people. “Clearly this is a trend with traction,” he says, and one that spans the ages. It is not just people in their 20s and 30s who choose to bank online. A majority (71%) of people says they would rather go to the dentist than to a bank.

This heightens the importance of digital communication, especially for younger generations, according to Broverman. “People want to engage with financial services online, and the way to do that is to have meaningful conversations using whatever new form of technology is available,” he says. Even something as simple as email can be useful during rocky markets to strengthen messaging to clients.

Myriad Uses

Technology has myriad uses, says James Detterick, a senior institutional consultant and corporate client group director at Morgan Stanley, and it has changed every aspect of the business. The broader adoption of social media, for instance, means that Detterick's division now uses LinkedIn consistently, and is beginning to use Twitter. “That’s been very useful and helpful,” he says, “and we’re starting to see a pickup rate.”

When speaking with investment committees and pension committees, Detterick says, much of the technology discussion has its impact on participant education and communication, and on how advice is placed into a plan.

Data and technology is especially useful in reaching out to distinct participant groups, Detterick says. “We’re segmenting populations more than we used to,” he says. Obviously messaging for senior executives is going to differ widely from messaging to the broader participant population. “In those senior executive carve-outs, we fold in things like generational planning,” he says.

Betterment has a different business model, Broverman says, since they give people a completely self-contained Web experience. When users sign up through the site, Betterment finds out about their lives and financial situations, and technology on the back end, with software, algorithms and auto deposit tools, creates a personalized investment portfolio, tells them how much they should start investing and how much they should save over time, Broverman says. “We want to understand where our clients want to go and give them a great client experience,” he says.

Detterick says his firm is beginning to see technology addressed specifically in requests for proposal (RFPs) from companies they serve, and it comes up more and more frequently.“They ask specifically what technology we use, what social media, what databases we use,” he says.

Communication and Relationships

Technology has increased his firm’s adoption of custom e-newsletters, Detterick says. “We’re able to write content specific to the client and use technology to understand different levels and send targeted communications about the investments we’re using,” he says.

Technology is crucial in supporting client relationships, or table stance, believes Andrew Wigzell, senior financial planner and financial services representative at Barnum Financial Group, an office of MetLife. “The technology doesn’t have to be the best, but it has to be something clients can put in a frame of reference, and it has to be given the way they want to receive it,” Wigzell says.

It is likely not just a matter of paperless statements, but using data aggregation or client aggregation, or giving access to electronic vaults they can use in case of, say, a lost passport while on vacation. In short, technology lets advisers deliver security to clients. “For me, technology is all about efficiency,” Wigzell says. “It allows me to maintain a lean staff and lean back office and still deliver a great client experience.”

The future of technology could have some unforeseen, negative consequences, Wigzell feels. “My concern is that we will turn into the people on the spaceship in Disney’s WALL-E,” he says, “sitting and not actually be having a conversation but looking at a screen.” In his view, it is paramount to maintain the personal connection with clients, whether it’s webinars, or conversations, or across a conference room table.

Wigzell notes that even with software developments and data aggregators that allow an adviser to track the performance of a client, there is a limit to the number of clients he and his team can manage and still be able to listen carefully and thoughtfully. In the end, he says, it still comes down to an adviser sitting across the conference room table from an investor, finding out more about what drives him and what needs the practice can serve.