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  • 1. Closing the GapHow Tech-SavvyAdvisors Can RegainInvestor Trust
  • 2. Page 2 | How Tech-Savvy Advisors Can Regain Investor Trust
  • 3. How Tech-Savvy Advisors Can Regain Investor TrustAccenture recently released key findings from our research A tandem Accenture study of financial advisors revealed aon an emerging US investor population coined Generation D Gen D advisor profile that closely corresponds to the investor(Gen D), where the D stands for Digital. This heterogeneous segment. In fact, 75% of advisors currently share the samegroup—which spans multiple demographics and represents command of digital technology as Gen D investors, integratingmore than 75 million people with $27 trillion in assets2 —is use of digital and social channels into their daily lives. Thedifferentiated by their broad adoption of technology, particularly majority (60%) has daily contact with clients through socialin their deeply ingrained use of digital and social channels in media, some likely flouting their firms’ current policies againstalmost every aspect of their lives. this type of activity. With 54% citing that they found or converted clients using these channels, it’s clear that the tech-These digital behaviors will have a growing impact on the savvy Gen D advisor realizes the importance of digital tools inrelationships these investors have with financial institutions attracting and retaining clients, and understands that this isand advisors—relationships that are currently undermined by increasingly becoming a key differentiator for success.a lack of trust in the financial system. This is particularly truefor the Millennials of Gen D, who will become an increasinglykey demographic as their income and assets grow over time.Chart 1. Financial Advisor Participants by Business Type or Company Division Accenture Research A total of 400 US financial advisors (FAs) took part in Accenture’s onlinePrivate Client Office/ 28%Multi-Family Office/ survey, conducted in Fall 2012. These 29%Single-Family Office participants included 250 brokerage/ 26% Independent 17% wirehouse/bank FAs and 150 who were independent or represented a regional Broker/Dealer 16% bank or insurance firm. There was a 19% Direct 10% 70/30 mix of male and female respondents, 12% with an age cohort breakdown of 6% 26% Millennials, 48% Gen-Xers, and 25% Boomers. Their experience averaged 10 years, five with their current firm. Wirehouse 10% A national firm with a 11% Requirements for participation included large advisor force 7% full-time employment as an FA selling investment products, a minimum of Insurance 10% Broker/Dealer 10% 12% two years’ industry experience in a similar capacity, and a currently active client roster. Regional 7% Broker/Dealer 7% 8% Bank 7% Broker/Dealer 7% 7% Dually Registered 6% Advisor 6% 8% Total FAs (n=400) Tech Savvy (n=300) RIA 4% Non-Tech Savvy (n=100) 3% 7% Page 3
  • 4. Overall, the research provided a number of revelations regarding the relationships betweenGen D advisors and their clients, which can be summed up in three key learnings.1. A surprising disconnect existsIn comparing investor and advisor to investors are often perceived as FAs also were found to overestimateresponses to our research questions, promotional—and possibly beyond their the strength of their relationships withAccenture identified significant perception level of investment knowledge. Investors clients, while underestimating thegaps that clearly need to be addressed by are seeking education, and if advisors don’t importance of the relationship itself. Thisthe financial community. offer what they need, they are likely to manifests itself differently, however, with look for that information elsewhere, the three generational cohorts withinThe erosion of investor trust since the resulting in missed opportunities. Gen D. The traditional relationship modelrecent financial crisis has led to an still seems to work well for Gen Dincreased need for investors to understand In another significant disconnect between Boomers, but Gen X-ers and Millennialsand feel in control of their investment investors and advisors, FAs tend to tend to be less trusting and perceive theirdecisions. Yet, advisors tend to seriously misunderstand their clients’ investment relationships with advisors as lessoverestimate investor knowledge, believing style, assuming their clients want to personal, more transactional, and42% are extremely knowledgeable about invest more aggressively than is often primarily results-driven. (See Chart 3.)investing, while only 12% of investors their preference. This is particularly trueactually see themselves as extremely with Millennials, who are by far the mostknowledgeable. As a result, what FAs intend conservative in their attitudes towardas clear and valuable communications investing. (See Chart 2.)Chart 2. The Gap in Investment Style Perceptions Chart 3. The Gap in Relationship Perceptions(The approximate percentage of client base categorized as Conservative Investors, (The extent to which each statement describes your current relationship with your Aggressive Investors, or Moderate Investors) clients/with your FA) 28% Takes time to 67% know me/client Aggressive 42% Gap -25% 13% Gap +15% Personal 63% relationship 34% Gap -17% 38% Gap -25% Moderate 51% If FA moves, 49% client moves too 31% Gap -18% 38%Conservative Clients care ONLY 40% 36% Gap +2% about results 19% Gap -21% Total FAs (n=400) Total FAs (n=400) Total Gen D Investors (n=1005) Total Gen D Investors (n=1005)Page 4 | How Tech-Savvy Advisors Can Regain Investor Trust
  • 5. 2. Digital/social tools are becoming table stakesGood news coming out of our research virtual meetings, online seminars, and more comfortable with the use of digitalis that the erosion of investor trust can online communities—FAs can explore the tools for connecting with clients andbe addressed through increased—and effectiveness of various digital channels referral sources. When asked whetherskillful—use of digital/social tools. They for delivering this information in an they would expect to use an internaloffer FAs unprecedented opportunities engaging environment. social network provided by their firm,for more frequent interactions with their 85% of FAs agreed that if you build it, Digital tools can be equally important forclients, helping them forge deeper, they will come. creating digital social networks withinstronger relationships. They also allow financial firms,1 providing channels for There is a growing perception amongFAs to draw from a broader, richer connecting FAs with specific expertise advisors that digital/social toolsreferral and acquisition network. and providing feedback on work-related will become highly functional tableResponding to their clients’ desire issues. These internal social networks, stakes for both external and internalfor investment education—and their which are becoming increasingly communications—and for current andopenness to using digital tools such as prevalent, can also help FAs become future career satisfaction and success. Page 5
  • 6. 3. Gen D advisors are seeing resultsWith real results validating their efforts, While most FAs acknowledged a number Social media utilization has also helpedtech-savvy FAs understand that they of benefits to using social media channels, FAs achieve their key professional goals.need to employ digital/social tools to the top reasons cited included: Among all FAs surveyed, 77% affirm thatcommunicate effectively with Gen D it helps with client retention, 74% agree • Getting answers to clients quicklyinvestors. More than half believe their that it helps them increase assets under and easily (59%)clients want, or even demand, digital management, and 73% say it has led tointeraction. • Increasing their touchpoints with an overall increase in client interactions. referral sources (58%) As Chart 4 shows, tech-savvy advisors areTheir responses also demonstrate advisors • Keeping up to date on industry news even more positive in their assessmentsare having significant success using these (58%) of how well these tools are helping.channels for client acquisition, with40% indicating they’ve gotten newclients through Facebook, 25% throughLinkedIn, and 21% through Twitter.Chart 4. Positive Assessment of Social Media Social media Social media Social media use has led to an increase helps with has led to assets in client transactions client retention under management Non-Tech Savvy (n=100) Tech Savvy (n=300) 49% 47% 54% Total FAs (n=400) 51% 46% 53% 81% 83% 85% 19% 15% 17% 73% 27% 23% 73% 26% 77% True Not True True Not True True Not True for Me for Me for Me for Me for Me for MePage 6 | How Tech-Savvy Advisors Can Regain Investor Trust
  • 7. Digital/social useoffers a clear advantageConsistent and effective use of digitaltools and social channels is becomingincreasingly necessary for financialadvisors to remain relevant to Gen Dinvestors who already represent a largeand viable market segment. Millennials,who are now most skeptical toward FAs,will drive this trend as their wealth—and importance—grows.Financial advisors with digital savvyare successfully using digital toolsfor attracting, building, and retainingrelationships with Gen D investors. Theyunderstand there are not only client-facing advantages to these tools, but alsobenefits inside their professional spheres.It is critical, however, that they understandand begin to address the perceptiongaps that may be undermining theireffectiveness with investors. The use ofdigital tools and social media offers solidopportunities for delivering the financialeducation their clients want and need,and for building stronger, more robustrelationships with multiple touchpoints.Financial firms need to evolve theirbusinesses to serve the needs andpreferences of Gen D investors, whoseranks will soon dominate the total investorpopulation. Accenture will be releasingdetailed reports in the coming monthswith implications and next steps for:• Finding, attracting, and retaining Gen D clients• Evolving the customer experience to meet their expectations, behaviors, and preferences• Defining the new role of FAs and identifying new practices to help them remain relevant in the digital age Page 7
  • 8. Notes AccentureAbout ContactsAccenture estimates and projections are Population is a global management Enterprise collaboration (or social Alex Pigliucci is the global leader for Accenture1 2the product oftechnology services andconsulting, publicly available population collaboration) refers to the process of Wealth and Asset Management Services.estimates from the US Census (2011 data), infusing social computing technology and alex.pigliucci@accenture.comoutsourcing company, with morePew Research Center data from the Pew principles within a firm—for example, Marc McCollum is the North America leadthan 246,000 people serving clientsInternet and American Life Project estimates providing advisors with internal social for Sales & Distribution in Wealth and Assetin more than 120 countries.of the online population (2011-2012), and networks similar to Facebook within the firm. Management Services.Combining unparalleled experience,the conditional incidence rates observed in Companies industry-wide are successfully marc.s.mccollum@accenture.comcomprehensive capabilities across allthe quantitative study. US Census data were using these networks to improve internal collaboration and the way employees work Mark Newcomer is a Digital Strategyused to estimate the size of the populationindustries and business functions, with each other while supporting customers. Architect focusing on digital marketingthat falls within the Millennial, Gen X, andand extensive research on the world’s and social media for Financial Services.Boomer age ranges. The resulting US populationmost successful companies, About Accenture mark.c.newcomer@accenture.comestimate was multiplied by the midpoint ofAccenture collaborates with clients tothe proportional estimates of online householdshelpboth thebecome high-performancefrom them US Census and the Pew Research Accenture is a global management consulting,businesses and governments. Thestudy to arrive at an estimate of the Online technology services, and outsourcing company,company generated net revenues ofMillennial, Gen X, and Boomer population. with 257,000 people serving clients in moreThe resulting figurefor the turn, multiplied than 120 countries. Combining unparalleledUS$25.5 billion was, in fiscal yearby the conditional qualifying incidence experience, comprehensive capabilitiesended Aug. 31, 2011. Its home page across all industries and business functions,figures from Accentures Gen D Investor survey,is www.accenture.com. to participate inwhich required respondents and extensive research on the world’sor fully control financial decision-making for most successful companies, Accenturetheir households (which disproportionately collaborates with clients to help themaffected Millennials), required incomes of no become high-performance businesses andless than $30k for Millennials and $75k for governments. The company generated netBoomers and Gen X-ers, and either some revenues of US$27.9 billion for the fiscalform of current investment (including 401k, year ended Aug. 31, 2012. Its home page isany stock or bond) without regard for amount, www.accenture.com.or (for Millennials) a stated intent to begininvesting in the next three years.Asset projections were the product of medianself-reported total asset levels taken from thesurvey and the population estimates. Medianswere used to mitigate the impact of thevery small, but disproportionately wealthyrespondents whose asset levels would haveskewed the projections upwards.This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice onyour circumstances. If you require advice or further details on any matters referred to, please contact your Accenturerepresentative. This document makes descriptive reference to trademarks that may be owned by others. The use of suchtrademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent orimply the existence of an association between Accenture and the lawful owners of such trademarks.Copyright © 2013 AccentureAll rights reserved.Accenture, its logo, and HighPerformance Delivered aretrademarks of Accenture.

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