Savers Want Better Financial Management. How Can Advisers Reach Them?

A lack of interest is no longer a good excuse. Despite the rise of robo-advisers, app-based individual retirement accounts, and highly successful “set-it-and-forget it” target-date fund plan investment options, many savers are looking for a good financial adviser, recent research shows.

Nearly two-thirds of Millennial and Gen Z investors (born between 1981 and 2012) see working with a financial adviser as key to their financial success, according to  released research Tuesday by Fidelity Institutional, the brokerage, custody, and adviser solutions arm of Fidelity Investments. Meanwhile, a recent survey from investment researcher YCharts found that a quarter of people already working with an adviser have considered switching since the onset of the pandemic, with 22% making the jump.

Both research reports connect to the businesses releasing them. Boston-based Fidelity announced a new set of tools for advisers to reach younger savers along with its findings. YCharts, based in Chicago, deals in research, presentation tools, and guides for advisers, asset managers, and investors. But the need for human connection from plan participants and everyday savers is real, says Ryan Sullivan, a vice president and managing director of applied insights at Hartford Funds.

“The big challenge these days today is getting people’s attention,” Sullivan says. “How do you get people’s attention for retirement savings? How do you intrigue people enough to have a conversation about how it can benefit them, and for advisers to get them to give more thought to their financial health?”

Sullivan, makes his business working with registered investment advisers and defined contribution investment option providers, says the plethora of new financial tools for participants often doesn’t address their basic fear of running out of money.

“There is this constant news barrage of things to worry about, from market volatility to inflation to world conflict,” Sullivan says. “The more advisers can help people understand this and give them a little more perspective helps them not be afraid to take that next step in planning.”

Know Your Client

Adviser communications professional Sullivan says it’s crucial for advisers to move beyond general discussions about the importance of retirement saving and tools. Instead, an adviser should start with getting to know the client, whether an individual or a business.

“Every adviser wants to be a student of the markets,” Sullivan says. “They need also to be a student of the business they’re working with. If your large plan is a construction company, learn more about the industry, the opportunities and challenges they are facing … they need to go over and above the notion that I want to have this plan and I’m hoping to manage this company’s assets.”

He noted missteps such as an adviser calling a client a “small business,” when in the client’s minds it is not small at all. He also uses the example of an adviser who went out and volunteered with a company during their volunteer day.

“For your bigger clients, this is a different way to show that you literally showed up to something that’s important to them that doesn’t make you a dime,” he says.

According to the YCharts survey, that client communication is not just a nice to have, but a business differentiator. More than one-third of 671 respondents surveyed in December 2022 said they are contacted infrequently by their clients, while more than 88% said they consider their adviser’s frequency and style of communication when deciding to retain their services.

“To create accountability for increasing touch points, define a cadence for client outreach that improves upon current efforts, but is also achievable,” YCharts wrote.

The firm noted tactics such as writing a bi-weekly blog post, emailing a monthly newsletter, or calling each of your high net-worth clients once a quarter. The survey showed that 73% of surveyed clients prefer email communications from their adviser, while 45% indicated a preference for phone calls and 35% like text messages.

Young Investors, Big Plans

Fidelity’s report found 63% of investors born between 1981 and 2012 believe working with an adviser is key to achieving financial success, and 60% feel a heightened need to engage a financial adviser this year due to economic uncertainty. The firm also noted that 57% of existing client assets are expected to be passed to the next generation by 2045 through inheritance. That shift “presents a significant growth opportunity for financial advisors – and potential looming business vulnerability for those who do not prioritize engaging with this group.”

The firm’s new toolkit for advisers includes a young investor readiness assessment that gauges how well a firm is meeting young investor needs, including creating a sustainable approach, new technologies and digital presence, diverse talent and culture, modern product offerings, and evolving client engagement models. It also includes access to a network of service providers offering financial literacy tools and applications.

Hartford’s Sullivan says the underpinning of all adviser communication should be authenticity, not just pitching the “latest and greatest” strategies.

“I think that clients can get a sense when it’s not well-intentioned,” he says. “Instead of advisers trying to be all things to all people, they should give thought to the people that they would like to spend time with … that’s where you can find a true affinity for working with someone.”