Attracting the Next Generation of Wealth: Differentiation, Centers of Influence (COI) and Social Media

  • Demonstrating firm expertise and services is the top priority (91%) for attracting the next generation and is deemed extremely or somewhat important by advisors in the study, followed closely by three actions all tied at 83 percent: having a strong reputation based on firm reviews and centers of influence relationships; offering a unique service or value proposition; and clearly communicating the benefits/differences of the RIA model.
  • When asked about the extent to which members of their firm can effectively articulate the firm’s value proposition to prospects, clients and influencers, a full 90 percent of firms report that client-facing advisors can do so all or most of the time.
  • Approximately one third of independent advisors (32%) consider referrals to be a formal and routine aspect of their firm’s culture, but more than half (55%) say that the role of referrals is informal and is up to individual advisors – some ask for referrals and some do not. Sixty-nine percent of advisors believe cultivating client referrals differentiates their firm.
  • Fifty-five percent of firms report that they measure staff performance based on the amount of new assets they bring to the firm.
  • With respect to cultivating the next generation of investors, half of advisors (53%) believe reaching the next generation will require engagement with entirely new COIs, while 47 percent believe that the current COIs will remain relevant.
  • Fifty-nine percent of study participants reported social media and online resources are used mainly as a tool for marketing and raising firm visibility versus a means of increasing engagement with current clients. Social media is noted, however, to be vital to communicating with the next generation of clients by 32 percent of firms. Advisors firmly believe (68%) that in-person contact will remain the crux of their business and that social media can never replace personal interaction.

“Whether it is the way advisors connect and build trust with these individuals directly, or how they engage the centers of influence around them, our findings reveal that relationships will be a key driver of RIA firm differentiation for this next generation of investors,” said Clark. “It will be critical that everyone, from advisors to office support staff, knows and understands Generation Now and is able to meaningfully connect them at every point of interaction to their firm’s value proposition,” he recommends.

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