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.
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.”
Other changes needed include the requirement to create cost efficiencies through identifying which types of technology partners can help to create the required client servicing cost efficiencies within firms.
Those advisers surveyed by AKG saw roles for client relationship management systems (51 per cent), back-office system providers (46 per cent), open banking/finance apps (44 per cent) and client portal/servicing apps (42 per cent), and to some extent, platform operators (32 per cent).
Muir added: “Utilising technology to pick up the routine tasks and support front end elements of the advice process can reduce the cost to serve, manual intervention and enhance the experience of both user and client.
“All of these capabilities are accessible now and create the opportunity to increase capacity, reduce operating costs whilst not diminishing the invaluable services offered by advisers and meet the future expectations of clients in how they interact with their finances.”
Consumer focus
The report also conducted consumer research which was facilitated on AKG’s behalf by Opinium between September 6 and 9 with a sample of 2000 UK adults.
It revealed that consumers are clearly concerned by the impact of inflation and the cost-of-living (41 per cent) on their lifestyle and finances, and 23 per cent of those were concerned about their finances/money matters in general.
Matters relating to an inability to save adequately featured among key consumer concerns, for example one-fifth (20 per cent) of those surveyed were concerned about not having a ‘rainy-day’ savings fund to rely on.
Some 17 per cent felt they were not saving enough for their retirement.
AKG said the paper acknowledges that any interaction with the financial services industry will likely be impacted by these matters for the foreseeable and is a chance for the industry to help.
Gillian Hepburn, head of UK intermediary solutions at Schroders, said: “The low level of interest in investing as opposed to holding cash is a concern. Despite increasing interest rates, we also continue to live with rising inflation and there needs to be a greater understanding of the impact of this on savings.
“The regulator identified that some people are at risk of harm by holding high levels of cash and as an industry we therefore need to communicate the benefits of investing whilst understanding the range of products available and the relationship between risk and reward.”
Hepburn added: “Given that women are more affected by the savings gap for numerous reasons including the gender pay gap and often adopting a more flexible working pattern due to childcare, it is also concerning to observe that females are less likely to invest into stocks and shares.”
sonia.rach@ft.com
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