High net worth clients want more engagement with their advisors and assets online

HNW clients want more online engagement and to leave the 'heavy lifting' to advisors

June 22, 2023 5:57 PM

It turns out that being glued to your phone and constantly refreshing for a new update is a personality trait shared by both the TikTok generation and high-earning wealth management clients.

A report released last week by Weston, Massachusetts-based fintech firm Advisor360° found that mass affluent and high net worth individuals are more engaged with their advisors and financial institutions online than ever before.

For example, 69% of the 2,000 investors polled in the client edition of the firm's Connected Wealth Report said they spend more time checking their accounts online today than they did two years ago. In addition, 74% of respondents said they check their portfolios through their advisor's client portal at least weekly; and 33% of Generation Z and young millennials are in their accounts daily.

Insight on the online behavior of the next generation is particularly important for advisors considering their tech strategies as they battle for the trillions of dollars expected to change hands over the next two decades during what has been deemed "the great wealth transfer" by many.

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A new research report from Financial Planning parent company Arizent called "Capturing the Next Wave of Clients" said along with craving engagement, young investors need attention from advisory firms.

Across the survey pool, "new investors" under age 27 made up only 7% of their total clients, and those aged 27 to 44 made up only an additional 20%. Yet "some of them will benefit from the first phase of wealth transfers," the report said.

The study says it is also important to offer more ways to engage. While older clients typically have more wealth and prioritize retirement planning and estate planning, younger ones could benefit from advice on college and student loan planning, buying a first home, asset security and even basic things like budgeting and starting to invest.

Richard N. Hart, the senior vice president of corporate development at Advisor360°, said the purpose of its analysis was to better understand technology's role in facilitating the advisor-client relationship from the perspective of the client.

Among the findings was a clear message that people who hire financial advisors are not interested in being their own investment managers. And while they want to be connected to their advisors and their assets at all times, clients rely on their advisors to do the "heavy lifting."

"They're entrusting their financial wealth with an advisor, so they don't want to do these self-service pieces … they expect that advisor to actually be able to do those services for them," Hart told Financial Planning. "And across the generations, more so for the older ones, face-to-face is still very, very important. And that makes a ton of sense. Money is personal, and they want to have that personal relationship."

The survey, led by Coleman Parkes Research on behalf of Advisor360°, was conducted during April and May 2023 among 2,000 mass affluent and high net worth individuals with managed assets of at least $250,000. The average assets under management of survey respondents was $568,342.

Here's a quick look at the key findings of the Advisor360° Connected Wealth Report: Client Edition.

Looking at the big picture

Mass affluent and high net worth investors are largely willing to give their advisors a complete picture of their financial situations in order to reach their financial goals. While 86% believe their advisors should have a comprehensive view of their total wealth profile including assets, liabilities, investments, insurance, real estate and bank accounts, just 40% of clients say their advisors have this already.

Those most resistant to this level of information sharing are older baby boomers and seniors, with 22% of them being unwilling to grant this type of access to their advisor. An additional 34% would allow it, but with conditions and controls attached.

Conversely, older Gen Z and young millennials between the ages of 20 and 35 are the most willing to provide holistic access. Nearly half (47%) say they already do, and an additional 21% would do so unconditionally if the opportunity arose. Only 11% of these young clients would refuse to give their advisor that level of information access.

"It makes sense that the generations who are already sharing the most about their lives online would be the least likely to have issues providing their advisors a complete and comprehensive picture of their financial portfolios," Hart said.

Anti-DIY

While survey participants rely on technology to help facilitate a connection with their advisors, the majority do not want to go it alone. Eight in 10 (82%) say that their advisors offer a client portal, and the vast majority of those who use the portal (91%) are happy with it.

Real-time portfolio access was the top factor that determined whether a client's experience using their advisor's portal was positive. Of least importance was access to educational content and market research. Only 10% considered this feature important for having their advisor's technology meet expectations.

The majority of those surveyed are satisfied with their ability to update their profiles online, move money and share documents with their advisors.

Balance high tech and high touch

Face-to-face is still the preferred way to engage with an advisor, but the Advisor360° survey revealed that technology is a key driver of these interactions.

More than three-fourths (76%) of respondents agree that mobile access to their financial portfolio increases engagement. But 11% said their advisor does not offer mobile account access.

Three in 10 (31%) respondents do not know or care about what their advisor offers in terms of technology. The remaining 69% say they take full advantage of their advisor's technology. More than half (52%) of older Gen Z and young millennials want the ability to text or chat online with their advisor, the highest of any generation.

Serving the "inheritance generations"

Hart said the Advisor360° survey also revealed differences in the ways clients 68 and up use technology to engage with their advisors compared to those who stand to inherit wealth. The study says the "inheritance generations" include the "inheritors" (ages 36-67) and the "future wealth holders" (ages 20-35).

More than half (52%) of older Gen Z and young millennials have changed or not hired an advisor because of poor technology, compared with 29% of inheritors and just 11% of older clients.

Nearly a third (33%) of future wealth holders check their account balances online daily, more than double the 15% of older clients who do. The majority of future wealth holders (75%) and inheritors (70%) say they are fully versed in their advisors' technology, compared to 58% of older clients.

"Technology is changing the way that advisors connect with the inheritance generations, but it is not eliminating the need for strong interpersonal connections," Hart said. "If anything, technology is revealing the gaps in their clients' wealth experience. It is up to advisors to provide ways to facilitate a more meaningful and collaborative financial planning experience for clients of all ages."