Advisors who aren’t stepping up their game by using social media, video and other technology, and aren’t reaching out to appeal to younger investors, especially high-net-worth millennials, are in danger of becoming the next Blockbuster, according to Samantha Russell, chief evangelist at FMG Suite and chief marketing and business development officer at Twenty Over Ten.
Advisors should also be open to changing their fee models to appeal to HNW millennials and other new investors, she said.
In a Q&A with ThinkAdvisor, the digital marketing expert talked about those and other industry trends to which advisors need to pay close attention.
THINKADVISOR: What are the top one or two concerns of your clients and/or the industry right now and why?
SAMANTHA RUSSELL: Even though there are many concerns wealth management firms are dealing with right now — the commoditization of wealth management, increased pressure to lower fees and be more fee-transparent, the rise of robo-advisors/DIY investing, the shift in how investors find an advisor in the first place — all these concerns really come back to one thing: shifting demographics and increased technology.
Younger investors are more savvy and likely to shop around (and better able to inform themselves via online information), and the number of HNW millennials and women is growing at a fast clip. According to a 2020 report by Capgemini, HNW clients are expected to transfer around $68 trillion within the next 20-25 years to their heirs, and 80%(!) of those heirs are likely to change firms after inheriting their parents’ wealth. That’s just a tremendous amount of money ready to change hands.
Add to that the commoditization of investment management, as well as the increasing comfort that each generation has with technology, and all of a sudden there is a much more pressing need for financial advisory firms to demonstrate value.
What’s your top piece of advice about those concerns?
The quickest way to become the next Blockbuster is to build for the future by focusing on what’s worked in the past. The firms that will benefit from this demographic shift will be the ones who are forward-looking.
What shifts are just too big and important to ignore? Where are your clients and prospective clients getting their information? Where do they spend time online? What do they want that you just aren’t offering? Pay attention to what information they are consuming, so that you can speak/write to address it. Be where they spend time online (YouTube, social media, blogs, etc.) so that your firm stays top of mind and part of the conversation. And constantly be re-evaluating and reinventing your offerings to keep up.
For instance, many of the firms we work with have started implementing new fee models (such as subscription or flat-fee models for financial planning), and one firm I know offers free financial planning to all of their clients’ children until they turn 26 (to coincide with insurance). Talk about a great strategy to stay in front of the “Great Wealth Transfer”!
Another new strategy that many firms we work with started this year is sending clients emails that contain a short video update instead of requiring clients to join yet another Zoom meeting.
Others may not be able to offer digital assets such as Bitcoin, but because they know their clients are incredibly interested in them, they are creating content around them and proactively talking to clients about this new frontier, discussing both the pros and the cons.
What’s the top trend or theme you’re following and/or writing about this year and why?
Following: digital assets (crypto, NFTs, Bitcoin, Dogecoin, etc.). It’s been fascinating to watch as we’ve gone from all the big players in the industry completely ruling these assets out as “a fad” just a year or two ago to seeing news in recent weeks that everyone from Goldman Sachs to Morgan Stanley to Visa, PayPal and Venmo are announcing new forays into crypto.
I’m not at all surprised, though, as not having an open mind and being willing to explore new frontiers is the biggest barrier to any business’ success.
Writing about: all things video. YouTube is the world’s second-largest search engine, and the average American adult spends 24 minutes daily on YouTube.
Every advisory firm has a website these days, but most do not have an active YouTube channel. There is so much opportunity here.
Who/what’s your top go-to source for news/analysis online, including on Twitter, and why?
I have scaled back my news consumption considerably since the start of the pandemic, but NPR is my daily general news source for everything (and I consume it mostly via podcasts and radio). I also subscribe to The New York Times and love their podcast “The Daily.” I listen to it most mornings while getting ready for the day. On Twitter, my top follows for interesting analysis are Morgan Housel (@morganhousel), Barry Ritholtz (@ritholtz), Harry’s Marketing Examples (@GoodMarketingHQ).
What book are you reading right now that you find insightful and why?
I almost always read two to three books at once. Right now I’m enjoying:
“Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life.” This book was written by Ogilvy advertising legend Rory Sutherland, and it is chock-full of compelling, fascinating stories from all areas of life, but at its core, tries to answer the question “How do some businesses conjure up irresistible products and ideas?” A must-read for any marketer, business owner, salesperson or entrepreneur.
“The Nature of Fragile Things,” by Susan Meissner. This is just a riveting tale, and I’m almost finished with it on just day two! It’s historical fiction set in 1906 San Francisco, during the great earthquake and fire. The main character is a young Irish immigrant so desperate to get out of a New York tenement that she answers a mail-order bride ad and agrees to marry a man she knows nothing about. It’s such a dramatic thriller. Highly recommended!
I’m excited to dive into Michael Lewis’ new book, ”The Premonition,” next.
What do you do for fun, and how does it help you?
My two little ones (Hudson is 5, and Grace just turned 3) keep me plenty busy, and I love going on adventures with them and seeing the world through their eyes. I also love any type of physical activity: running, hiking, swimming, strength training — any kind of movement. This year my husband, Ryan, and I discovered pickleball, and so that’s been so fun to learn, too.
Do you have any professional or personal plans you can share?
Last year, I read 58 books, so one of my goals for this year is to beat that number! If anyone has a great book recommendation, I’d love for you to send it my way!
I also create one to three videos a week but right now outsource all the editing, so another goal of mine is to (finally!) learn how to do (good) video editing myself.