How advice must evolve to satisfy the next generation of clients

A recent survey from Pollara Research and the Investment Funds Institute of Canada (IFIC) found 94 per cent of clients trust their financial advisors. However, one practice management expert said it may be time to prioritize another component of the advisor-client relationship.
Julie Littlechild, founder and chief executive officer of Absolute Engagement in Toronto, recently polled 100 U.S. wealth advisory firms that manage more than US$1-billion in client assets. Only 5.4 per cent ranked themselves five out of five regarding their own firm’s client experiences.
When she explored further, she found that client satisfaction wasn’t always the firm’s primary goal. Instead, they wanted to focus on driving deeper client engagement.
“Satisfaction is about delivering on a client’s expectations, their service expectations. However, an engaging experience is much more about how they’re feeling,” explained Ms. Littlechild, who spoke at IFIC’s annual leadership conference in Toronto last month.
“If almost 100 per cent of clients are satisfied, then satisfaction ceases to become [a] differential as it effectively makes you as good as everyone else,” she added.
She noted that when baby boomer wealth is passed down to millennials and younger generations, these clients will have very different expectations and communication preferences.
“We’ve seen a lot of [older advisors] whose clients are equally older and are struggling to create an experience that will be attractive to that next generation,” Ms. Littlechild said.
Mario Cianfarani, head of distribution at Vanguard Investments Canada in Toronto, said advisors need to retain assets during wealth transfers to continue to grow their businesses.
“It’s one thing to offer an online portal … It’s another, fundamentally, to look at how to offer advice across all of these [platforms],” he said at the conference.
Ultimately, advisors need to build relationships with the client’s entire family. He noted that in some cases, younger generations will eventually leave their parents’ advisors because of a lack of attention, taking considerable assets.
Mr. Cianfarani said advisors should take the time to develop plans for all family members. Younger investors, who may not have many assets, might need someone willing to discuss finances and meet them where they’re at in life.
“Maybe that means a one-on-one conversation … or engaging with them digitally,” he said. “It’s about being flexible around how they’re engaging.”
Brian Waldeva, vice-president, wealth management solutions, at CGI Inc. in Toronto, said at the conference that technology can be used to develop insights into client needs so they can have a better experience. He observed many firms rolling out high-end technology at considerable cost but without a business champion to drive the technology adoption.
For example, firms need to do a better job of understanding how advisors will use the technology and if it will make sense or increase their workload. He cited the adoption of electronic documents from paper as an example.
“For an advisor who is having a conversation with a client, they print out the forms and give them to their associates to figure out how to use the system,” he said.
Jennifer Plenert, senior vice-president and national manager, Ontario, at National Bank Financial Wealth Management, recalled many technology changes to create efficiencies over the years and believes a focus on change management is paramount.
Speaking at the IFIC conference, she said firms should focus on tools advisors will use, such as detailed client surveys.
Improving client engagement may also mean expanding the advisory team. Ms. Plenert noted that in the past, a team meant one advisor and an assistant, but today, she sees teams of up to 20 people – including multiple advisors, administrative support, marketing staff, an investment analyst and an insurance specialist.
“We essentially have several small businesses operating within the context of a financial firm,” she said.
Ms. Plenert added that advisors may need more education and training on how to manage a team.
“Advisors join the business with a business [or] finance background and now have to understand [human resources] – how to hire, how to handle conflict with the team in addition to taking care of clients,” she said.