Your IndustryJun 24 2022

Younger client segment still underserved by advisers

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Younger client segment still underserved by advisers
Pexels/Andrew Neel

Research by the company on the future of financial planning found that just under a quarter (20 per cent) of the average adviser’s clients are aged under 45.

The research found that most advisers’ clients are aged between 46 to 60 (44 per cent), while a third (33 per cent) are over 60.

It found that when it came to exploring new clients, almost two-thirds (63 per cent) are targeting those aged 51 to 65, with over half (56 per cent) looking at 66 to 75 year olds.

SJP said that “advisers are not sufficiently broadening their service to the younger demographic” and argued that this would not change anytime soon, with only 25 per cent of current advisers exploring under 35s for new clients.

There are many key influencing factors to take into account when we look to the future of financial planning.Tony Wickenden, Technical Connection

"The younger demographic is therefore underserved, but this presents an opportunity for advisers in future to expand their client base," the company said. 

Meanwhile, personalisation was identified by the report as something that should be a priority for advisers and ensuring clients are regularly listened to, especially as the industry looks to attract is next generations of clients.

The research was conducted by Ad Lucem in February 2022 and the report was led and curated by Technical Connection. It surveyed approximately 1,000 advised clients with a minimum of £50,000 investable assets, 200 advisers and 200 unique advisory firms. 

Technical Connection’s managing director Tony Wickenden, said: “Nearly a decade on from the retail distribution review, which aimed at transforming how financial advice was delivered and paid for, there are many key influencing factors to take into account when we look to the future of financial planning.

"These include, but are by no means restricted to, technology, regulation, consumer demand and expectations, together with adviser capacity and competence.

"Add to this economic, tax and pensions policy, client vulnerability and the ever-onward march of technology and you have a heady cocktail of opportunities and threats to be navigated.”

Hybrid advice

Elsewhere in the report, the research highlighted the need for advisers to embrace the power of technology.

It said: “Generally speaking, consumers want more technology touch points, while advisers want to keep tech on the periphery. This is not going to work in the future and advisers need to be prepared to adopt a new approach.”

Hybrid advice is not just a trend, but is rather an advice model that arguably should have been used for a long time prior to the pandemic. Amanda Cassidy, Quilter

Advisers surveyed said they saw an opportunity for technology to add value to their business, identifying cash flow planning, client reporting, client reviews, portfolio tracking and assessing risk attitudes as key areas that could benefit. 

Quilter Financial Planning's managing director Amanda Cassidy agreed. 

She pointed out that technology has already helped increase efficiency for advisers with ‘face-to-face’ virtual meetings, allowing advisers to meet more clients in a day, which in turn increases the accessibility of financial advice to a wider range of clients and helps to bridge the advice gap.

“Hybrid advice is not just a trend, but is rather an advice model that arguably should have been used for a long time prior to the pandemic," Cassidy said.

"It is important that firms embrace this exciting new world of hybrid advice as it continues to evolve as it could be crucial to helping those with less wealth unlock the value of financial advice."

She explained that a hybrid model has benefits for advisers too.

“It is likely that they will continue to embrace digital advice and will mix in person meetings with digital," she added.

"Not only may this be favoured by clients, but hybrid advice allows advisers to reclaim multiple hours of their working day that previously would have been spent travelling to meetings. These hours may now be used far more efficiently and should support a better work/life balance as well as enable advisers to see more clients.

"We see hybrid advice having a significant positive impact on the advice community, as well as on clients as they can continue to receive advice in a way that suits them."

She added: "While ‘in person’ advice will still continue to be key, it will be increasingly important that advisers develop the skills needed to build the same level of trust with new clients in a remote or hybrid environment.”

The report also noted the increase in younger generations being more keen to learn more about financial planning and the need for a social media presence from advisers.

It stated that for younger people, the first touch point for financial advice, or any subject of interest, is usually the internet and advisers need to understand the ability of social media to influence views and opinions that will feed into a person’s decision making process. 

Tax efficiency and intergenerational wealth transfers were also identified in the report as subjects that are key for clients, but less so for advisers, with the research finding that advisers tend to underestimate how much clients value maximising tax efficiencies.

jane.matthews@ft.com