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With the rise of millennials and Gen Z in the financial industry, the traditional approach of “knocking on doors” to reach investors is obsolete. This shift away from traditional service tactics presents opportunities for the industry to connect with a younger generation of clients in more meaningful ways.
Axtella’s network of firms – including their independent broker-dealers, Sigma Financial Corporation and Parkland Securities LLC, and their RIA, Sigma Planning Corporation – are focused on cultivating relatable service tactics for end investors, which also make financial professionals’ lives easier.
First, there is the need for better client communication technology. According to AdvicePay, nearly 80% of millennial and Gen Z investors are more likely to consider working with a professional who uses the latest technology.1 This means that younger investors are more primed to expect a seamless user experience while working with third parties.
A notable industry solution for adapting its communication methods is the rise of compliant texting – something that Axtella has also seen effectively resonate with a wider demographic of investors.
Compliant texting gives investors a digital communication option outside of traditional phone calls or in-person meetings. Additionally, financial professionals can enhance their client engagement and streamline their own operations while mitigating the burden of monitoring and ensuring adherence to regulatory standards.
Similarly, the industry is also looking at new service models to reach younger demographics. Not all millennial and Gen Z investors want to adhere to traditional payment models, such as those where financial professionals take a percentage of their assets under management. This necessitates service model options that meet changing investing needs.
One advice model gaining traction among newer investors is the Fee-for-Service model, which can be likened to the “Netflix of financial planning.” This model positions financial advice within the realm of monthly paid subscriptions.
AdvicePay also shone a light on this model’s popularity among millennial and Gen Z investors, saying they would prefer to use a Fee-for-Service model rather than paying a percentage of their AUM.2
In essence, the shift towards the Fee-for-Service model represents a paradigmatic change in how financial services are delivered and perceived. By offering a familiar subscription-based structure, a firm can demystify the concept of financial planning and create a wider and more approachable range of engagement models that provide flexibility and personalization options.
When embracing this model, financial professionals can not only adapt to the changing needs of investors but also position themselves as partners in their clients’ financial journeys. When newer investors’ assets grow through time, they can “graduate” up to different client models that match an increased sense of complexity, creating the potential for long-term clients for professionals.
Rather than relying on outdated practices, our industry is evolving to meet end investors where they are and streamline their experience to minimize perceived barriers to entry. Tactics like compliant texting and Fee-for-Service models offer accessibility, affordability, and personalization options, which align with newer consumer preferences.
For more information on how Axtella is revitalizing wealth management for its investors and its professional network, visit www.axtella.com.
1, 2 AdvicePay, 2024 Fee-For-Service Industry Trend Report
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Sigma Financial Corporation, Member FINRA/SIPC. Parkland Securities, LLC, Member FINRA/SIPC. Sigma Planning Corporation, A Registered Investment Advisor.
