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How advisers will communicate with clients in five years

Video conferencing, text messaging and more robust online services will define the way advisers interact with clients in the future

Jul 9, 2014 @ 12:01 am

By Matt Sirinides

Source: <i>InvestmentNews</i> Business Model of the Future Survey
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Source: InvestmentNews Business Model of the Future Survey

In a first for InvestmentNews Research, we recently fielded a survey that reached out to both advisers and investors to get a sense of whether advisers are prepared to meet the expectations of the next generation of clients. Among the questions we sought to answer was, how will the basic delivery methods of financial advice change over the next five years?

With the rise of the smartphone — 85% of investors own and use one regularly, and the device has higher ownership rates than laptops, desktops, or tablets among our respondents — the means of communicating with clients have become as varied and nuanced as ever. Nearly 9 out of every 10 clients can, with a device right in their pocket, communicate via phone, text, video conference, email or social media in an instant, and the channels for doing so are constantly evolving.

In this first post recounting some of the results from the study, we track how advisers and investors view the changing nature of the way they communicate. The full research study will be the centerpiece of the upcoming InvestmentNews Business Model of the Future report on how advisory firms are evolving to meet the demands of tomorrow.

In our survey, both advisers and investors agree that in the future, telephone calls and in-person meetings will remain among the most popular means of communicating directly. But more notably, they agree that these forms of outreach will become less important. Instead, social media, text messages and video conferencing will grow in importance. Video conferencing, in particular, looks to take off substantially: nearly 1 in 3 advisers said they would rely on it in five years — a meteoric jump from the less than 1 in 20 who said they do so now.

Investors, however, weren't quite as bullish in predicting its future prevalence, with a lesser 1 in 5 saying they thought they would rely on video conferencing. But among investors under age 45 — advisers' next generation of client — that figure was 28%, closely matching adviser perspective, and a sign that advisers are on track with their plans to make video conferencing a more important piece of their service delivery in the future.

Where advisers and the under-45 set don't quite match up, however, is with text messaging — 1 in 5 investors under 45 think they will rely on text messaging in 5 years, but just 8% of advisers say the same. Younger clients are used to confirmations, alerts and short messages delivered via text message, and in 5 years, they expect more professional service communications to be delivered that way.

The current crop of adviser clients is overwhelmingly in the age 55-65 range, and that generation has a different set of expectations. But if advisers want their businesses to remain evergreen and gain the clients of tomorrow, they'll have to adjust to a new set of expectations, and that generational shift may be arriving sooner than expected.

That's because investors aged 45-54 align more closely with their younger cohorts in their expectations. When asked to compare the current set of services they are offered online by their advisers versus what they'd expect to be offered in 5 years, 64% said they expect more than the current selection; 65% of those under 45 said the same.

Older investors seem more satisfied by what they get online. Among those aged 55 and older, just 41% said they expected more services online. In this instance, advisers were right in the middle, with 56% planning to offer more online services in 5 years, but only 18% said they would offer “a lot more.” Meanwhile, 34% of investors under 55 said that they expected a lot more online services than are currently on offer. This is another case of advisers seeing the changing tides, but hesitating to commit to the changes necessary to meet them.

If advisory firms would like to attract and retain the wealthy clients of tomorrow, they will need to begin altering their service models now to meet future expectations.

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