Op-ed: Consultants have to meet the digital requirements of young investors

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Young investors are more involved in the stock market than ever.

An e-trade study found that 51% of Millennial and Gen Z investors said their risk tolerance has increased since the pandemic – 23 percentage points higher than the general population.

The study also found that they are taking cash from the sidelines. More than one in three investors (34%) under the age of 34 said they ran out of cash and took up new positions, 15 percentage points more than the general population.

According to a new study by Deutsche Bank, half of private investors in the 25 to 35 age group plan to direct 50% of their stimulus checks to the stock market.

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I’ve witnessed this behavior firsthand: my millennial daughter has made it her business to invest and even use part of her portfolio for her own stock picking.

When choosing these investments, she relies on her friends, her own research, and social networks – both online and offline. Of course, it is nothing new to heed advice from friends, but these days the diffusion and accessibility of crowdsourcing advice on trading platforms or online communities can play an important role.

Gone are the days when money was a taboo subject. Instead, it’s a fair game to share everything from student debt to personal salary information – not just with friends and family, but with audiences through social platforms.

Millennials and Gen Z grew up in the age of social media and discuss even their most personal information and experiences online. Social media offers space for connections. Like my daughter, newer and often younger investors probably use their networks for advice and validation.

However, following financial advice on social media platforms can involve excessive risk and high stakes consequences. It wasn’t long ago that individual traders on Reddit skyrocketed the value of GameStop stock and gave the company a market valuation swing of more than $ 30 billion.

The drama underscored that the social aspect of modern finance is a big deal. These investors don’t want to go it alone on their investment journey. Because of this, savvy financial advisers can meet this need by meeting young investors on the channels and at the moments that matter most to them.

Conclusion: Financial advisors have to meet the digital demands of young investors.

The pandemic opened the door to remote relationship building when customer meetings were held over video-based services like Zoom.

Consultants began texting clients en masse and one at a time to ease fears and remove uncertainty in times of market instability. While consultants have become increasingly active on social channels in recent years, this level rose dramatically in 2020.

Young investors expect to interact and learn digitally. Hence, financial advisory firms that not only adapt but improve their game and maintain new practices are best suited to win the business.

Instead of this personal pre-pandemic investment seminar, consultants can conduct real-time Q&A on their live or consultant page on Facebook Live. Those consultants already working with children of existing Boomer clients could do a short Instagram roll titled “Three Ways to Invest” sharing their experiences.

Ultimately, while a robo-advisor can help maintain good saving habits and familiarity with investing, a trustworthy financial advisor is still best equipped to provide authentic, bespoke services to the young investor. And that becomes even more important when life gets more complicated and financial situations are overlaid with an emotional component.

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Building a strong digital presence and fostering rich social interaction is not about getting what you’ve always done online. Instead, examine the platforms and media you plan to use. Look at their strengths and weaknesses and think about what you want to achieve.

Ask yourself: what do Instagram and Facebook, for example, offer that text or zoom don’t? Where does LinkedIn fit in? How would you like to use Twitter?

When developing a digital strategy for successful communication, the following points should be considered:

  • Meet customers where they are: The omnichannel consumer is here to stay and modern consultants need to connect with them when and where they want on their preferred channels. A boring online offering does not attract young, digitally savvy investors. In fact, it can make them go the other way. A cohesive digital identity that spans platforms can go a long way in showing that you speak their language. Primarily to stay connected? Maintaining an authentic, human touch in a way that meets real people’s needs and expectations throughout the customer journey.
  • Show your worth: As a trained professional who understands the intricacies of the market in ways that most young investors are unfamiliar with, you can calm the panic, respond to market changes, and offer trusted, personalized advice in ways that robo-advisors cannot. Use the tools in your arsenal to show you care about your investors’ interests.
  • Use ESG to your advantage: Younger generations care about values. A consultant’s environmental, social, and corporate governance investment skills can help attract and attract young clients who want to support companies they believe will generate solid returns. Using social media to highlight topics that investors are passionate about and the high performing companies that work in those areas could go a long way. In our post-pandemic world, consultants who stand alongside customers to embody brand values ​​that go beyond the company and are committed to a better society, world and future will naturally deepen their customer relationships.
  • Be Compliant: None of the items on this list have any meaning unless you pinpoint the compliance element. The regulator for the financial industry and the Securities and Exchange Commission want to ensure that digital practices are appropriate, fair and in the best interests of retail investors, are therefore fully verifiable and comply with security and privacy regulations. It’s a big job, but tools are available to make digital communications work seamlessly while being fully compliant. Talk to your corporate team to learn more about your options and create a plan.

Consultants are ready to take a real step forward in reaching young, digitally savvy investors.

Modern financial advisors can now offer the best of all worlds by providing competent, highly relevant, and compliant content, enabling meaningful digital interactions, and nurturing a community of young investors.

The question is who is ready and willing to take the plunge?

– Posted by Mike Boese, CEO of Hearsay Systems

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