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How tech-savvy advisors regain Gen D investor trust

Read Accenture's report on how tech-savvy financial advisors can regain trust from the digital generation or “Gen D” investors.

Overview

The relationships investors have with advisors are currently undermined by a lack of trust in the financial system. This is particularly true for the Millennials of the digital generation, or Gen D, which will become an increasingly key demographic.

Accenture research identified a significant investor segment that is defined by its behaviors rather than traditional demographics—Gen D. This generation’s use of digital technology will have a growing impact on the relationships these investors have with financial institutions and advisors—relationships that are being undermined by a lack of trust in the financial system.

In 2012, Accenture conducted a tandem study of financial advisors. A total of 400 US financial advisors took part in the online survey, revealing a Gen D advisor profile that closely corresponds to the investor segment.

Key Findings

A 2012 Accenture survey of Generation D advisors revealed three key findings:

  • A surprising disconnect exists between Gen D advisors and their clients. In comparing investor and advisor responses to Accenture survey questions, significant perception gaps were evident. Advisors tend to seriously overestimate investor knowledge and the strength of their relationships with clients, while underestimating the importance of the relationship itself. Advisors also tend to misunderstand their clients’ investment style.

  • Digital/social tools are becoming table stakes. The erosion of investor trust can be addressed through increased use of digital/social tools. They offer advisors unprecedented opportunities for more frequent interactions with their clients, helping them forge deeper, stronger relationships. They also allow advisors to draw from a broader, richer referral and acquisition network.

  • Gen D advisors are seeing results. More than half of the advisors Accenture surveyed believe their clients want, or even demand, digital interaction. Advisors are having significant success using these channels for client acquisition—40 percent indicated they’ve gotten new clients through Facebook, 25 percent through LinkedIn and 21 percent through Twitter.

Analysis

Consistent and effective use of digital tools and social channels is becoming increasingly necessary for financial advisors to remain relevant to Gen D investors. Millennials, who are now most skeptical toward financial advisors, will drive this trend as their wealth—and importance—grows.

Accenture believes advisors can attract, build and retain relationships with Gen D investors by taking the following action:

  • Understand and address the perception gaps that may be undermining effectiveness with investors.

  • Evolve their businesses to serve the needs and preferences of Gen D investors.

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