As retirees begin to draw down their assets, registered investment advisers must look ahead to the next generation. That's what Bernie Clark, head of Schwab Advisor Services, reminded about 1,900 advisers during his opening remarks at the firm's annual conference in Denver this week.
Mr. Clark views getting the attention of 30- to 45-year-old investors, the group Schwab calls “Generation Now,” as the industry's next major challenge. Advisers will need to update their marketing, incorporate new technology — including social media and mobile applications — and diversify their practices to appeal to this group, he said.
“This is the time for us to start focusing on the future together,” he said. “You need to get in their sights.”
Although assets among RIAs have doubled to $4 trillion since 2008, nearly two-thirds of clients are retired or plan to retire in the next year, according to Mr. Clark. Sixty-three percent of retirees are already drawing down assets, and $16 trillion in wealth is expected to transfer to the next generation by 2050, he added.
“It is so critical that we keep our leadership position, and continue to evolve as generations and technologies evolve,” Mr. Clark said.
He urged advisers to do a better job of marketing to younger people, who tend to be leery of the advice industry.
“They don't know who you are,” Mr. Clark said. “They confuse you with the Wall Street movies they've been watching.”
He said RIAs who can market themselves as more transparent and can show why independent advice is right for the next generation are in a good position to gain their
trust.
“Sit on the same side of the table and demonstrate shared values,” Mr. Clark said.
Better outreach begins with an updated website and a social media presence, which lets younger clients find advisers more easily.
“Generation Now does their homework, and they do it online,” Mr. Clark said.
He also encouraged advisers to look for clients in different places, including alumni associations, and church and volunteer groups.
“Centers of influence need to change,” Mr. Clark said. “It can't just be founders and principals.”
The lack of industry diversity will hurt advisers as they look to capture the next generation's business, he said. As founders prepare their own succession plans, they need to be hiring more women and minorities. Forty percent of millennials are ethnically diverse, compared with 25% of boomers, he added.
“The importance of women and their underrepresentation in our industry is so profound to me,” Mr. Clark said. “It's critical you grow the talent within your firm with more diversity of ethnicity, gender and age.”
