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Advisers recognise need to get creative for acquisition strategies

Advisers recognise need to get creative for acquisition strategies

Advisers are focused on the need to change their business models if they are to attract the next generation of clients, according to new research from independent consultants AKG.

In the paper ‘NextGen or LostGen? – The need to develop new client acquisition strategies’, the study found 91 per cent of advisers saw the need to adapt to work with different client age groups and segments while also making use of new technology.

Beyond the norm of targeting men and women with families, client sectors seen as important for new business include business owners, specialist sectors such as doctors or the armed forces, young families and the spouses or partners of existing clients.

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Matt Ward, communications director at AKG, said: “Although some firms may be comfortable with their focus on servicing existing clients, over the longer term those aware of the requirement to future-proof their client base and the value of their business will recognise the need to develop new client acquisition strategies.

“This will not necessarily be easy, and the situation is exacerbated currently by clients in the cost-of-living crisis and the perceived cost and regulatory issues facing advice firms.”

Ward added that while expanding footprint via relationship development with wider family units will play a key role, “firms will need to get creative with their targeting, acquisition, and servicing strategies for the next generation of clients”.

“This will inevitably require digital/technological support to create cost and process efficiencies but will also need a deeper understanding of future client requirements.”

However, half of advisers identified the cost-of-living crisis as the biggest barrier to change and 49 per cent pointed to the impact of cost margins on their firm.

Regulation (47 per cent), developing new service/fee models to accommodate new clients (47 per cent) and the length of time needed to make new clients profitable (41 per cent) were also seen as key issues relating to new client acquisition.

Further change needed

The survey was carried out during August 2022 using an online survey with a sample of 100 financial advisers. 

It found that advisers recognised things need to change with around 16 per cent stating they will need to develop digital servicing functionality.

Some 35 per cent said they will need to add a more transactional service/fee model which will be upfront rather than ongoing.

Other advisers (14 per cent) said they will need to add a charging model to attract families such as offering some free services to next generation clients.

Over a quarter (26 per cent) said they will need to develop both digital servicing and new charging models.

Duncan Muir, global industry lead - financial services at Fluido, said: “The opportunity to adopt modern and innovative technology is here today, however, many aren't aware or don’t have the roles in their business to define a route forward. 

“There is too much reliance on providers developing new capabilities however there are too many conflicting demands on their table.”