Are Today’s Financial Advisors Ready For The Clients of The Next Generation?

The tech babies of Generation Alpha, who know nothing but touch screens and voice control, will be finance-driven adults in no time at all, but is the industry prepared? The financial advisors of today may already be towing a thin line with their millennial and Gen Z parents.

Our thoughts were brought about by an article written for moneymarketing.co.uk, and vocalised almost perfectly by Chanelle Pattinson, financial planner and co-founder of Money Means, who said:

“Financial planning has been done in the same way for such a long time with not a lot of changes at all. It works for the clients they have now. But if they want to look at new clients and potentially younger players, they need to think slightly differently.”?

We couldn't agree more at Ningi, which is why we’re passionate about change - particularly when you look at the possibilities of losing a generation of clients to the cesspits of social media. It seems the latest generation to hit adulthood have already started taking financial advice from these alternative (and potentially unqualified) sources.?

According to a survey from marketing firm Vericast, Gen Z are already banking on social media personalities, with the next wave of investors saying they’re more likely to get financial advice from TikTok (34%) and YouTube (33%) than from a financial advisor (24%).

While the idea of young, impressionable people taking financial advice from an unregulated social media account may send shivers down the spines of many professionals, it would appear to be having some benefit; as in the case of 21-year old Katie Thompson, as reported by New Zealand-based 1News:?

“I was going through a real phase of trying to get my head around shares and it’s [TikTok] really the only media outlet that simplified it so I could comprehend what they were saying, everything else was just a bit confusing.

There's just so much information on Google, and also I’m a visual learner so I understand it better on TikTok and it’s so much quicker…

Also when I find a few videos I’m after, there’s like an algorithm so it kind of shows you the same relevant videos again.”

What’s apparent is that platforms like TikTok are turning relatively complicated concepts into digestible bites of information; swapping out jargon delivered by professionals in suits way into their careers, for layman’s analogies posted online by content creators whose authority is questionable.

Let’s take TikTok content creator Humphrey Yang for example, who has amassed 3.3 million followers, 46.6 million likes and millions more views. His video explaining how ‘shorting a stock’ works - by creating the comparison between borrowing an iPhone for a year, only to sell it and re-buy it when its cheaper in a year’s time - has amassed 2.5 million likes and a whopping 14.5 million views.?

While this analogy - as far as breaking down the concept goes - may actually work for many young people, Yang’s experience in the field of financial advice (a finance degree, a year as a financial adviser at Merrill Lynch and five months interning at a Palo Alto investment bank) is not what you might expect from the most popular financial advisor on TikTok for under 30’s. But the information he’s disseminating is at least accurate, and helps young individuals get an understanding of the world of finance.?

However, not everyone with a TikTok account dishing out ‘advice’ can be trusted. It all boils down to the same warning we’ve all had drilled into us since the 90s: you can’t believe everything you see on the internet.

While some may consider TikTok a trend or fad, its sheer popularity and rise to dominance is a clear indicator of the direction that media consumption, and thus the psychology and behaviour of the consumer, is heading.?

It’s up to advisors, firms, and indeed the whole industry to find ways to adapt to the new climate and re-establish themselves as the authority in the matter of financial advice and planning.??

Asides from establishing a social media strategy that speaks to the clients of tomorrow, adopting new technology that’s both modern and un-convoluted is essential to the future of the financial advice industry; from IFA’s to the oldest, most established firms.?

Technology like the platform we offer at Ningi, that provides a seamless, modern experience for both advisor and client. By utilising automation and multiple digital tools the advisor will be able to deliver a faster, more efficient service. Through their account, they’ll have access to contacts; accounts; key metrics; tasks and upcoming events, as well as direct and secure contact with their clients - all in one place.

The client will enjoy an aesthetic they’d expect and respect. They benefit from a faster service, a compact digital hub that displays all their finances; assets; plans; key stats, and even recommendations, while having a secure service to contact their advisor directly from their account.?

But aside from the tech and an up-to-date digital strategy to match, they’ll need to go that little bit further. Take our clients New World Financial Group, who despite emerging in the midst of a pandemic, are already delivering on their ethos with strength.

They’ve been hosting financial planning presentations to local businesses for the benefit of their employees, with the purpose of boosting their understanding of the various elements of personal finances, along with providing some useful hints and tips - all at NO extra cost. You can check out their post here.

It’s evident that change is necessary, and judging by some of our clients, is already happening. Do you think the industry is ready for the next generation? What points do you think we’ve missed? Let's open up the discussion!