Is your business ready for the next generation?
Prepared by Daryl Stout, MLC Business Growth Manager, VIC/TAS/SA
Successful advice practices of the future will be those that can service clients over a lifetime.
Over the coming years, licensees and their adviser networks will be instrumental in bringing financial planning to future generations of Australians. When you consider that most advice clients belong to the Baby Boomer generation, it is imperative that licensees are able to help practices service younger generations.
There is an inherent risk that financial advisers may fail to diversify their models and adopt new ways of servicing clients throughout their lifecycle. Licensees can play a pivotal role in helping practices meet the changing needs of different demographics.
Younger generations missing out on valuable advice
Many financial advisers have built their businesses on a foundation of retirement advice. While this may seem logical in a financial system where superannuation and retirement planning play a central role, younger generations of Australians are missing out on valuable financial advice.
Research conducted by Momentum Intelligence on behalf of MLC Licensee Network found that Baby Boomers are currently the most common advice client generation (54.3 per cent), followed by Generation X (38.1 per cent), Millennials (5.8 per cent) and Generation Z (1.9 per cent).
Increasing opportunity to target younger generations
What these figures show is a huge opportunity for financial advisers to be targeting younger generations and building strong relationships with clients over their lifetime. While financial advisers admit that the majority of their clients are either approaching or in the retirement phase, they also recognise that times are changing.
Financial advisers indicated there will be major shifts in their target client demographics in the future with Generation X becoming the most common advice client generation (67.5 per cent), followed by a drop in targeting Baby Boomers (36 per cent), and a significant increase in targeting Millennials (32.5 per cent), followed by Generation Z (8.4 per cent).
Financial advices must meet needs of varying demographics
Different demographics will require different services of their financial adviser as they reach major milestones such as buying a home and starting a family. It is these ‘trigger’ moments that often drive people to engage a financial adviser in the first place. Practices that have developed a strategy to service clients of any generation at various milestones will have a major advantage over their competitors.
Licensees can help in servicing clients' needs such as pricing
Licensees have a significant role to play in helping financial advisers prepare their businesses to service clients across multiple generations. Changing client expectations present a risk to advice businesses that are not adequately resourced to manage them.
One of the biggest areas of concern for financial advisers will be pricing their services correctly. This is where an innovative licensee partner could help. Together, licensees and their financial advisers can build diversified businesses that are capable of meeting the changing needs of their clients at any stage of life.
This article has been prepared by Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL number 230323 and Godfrey Pembroke Group Pty Ltd ABN 38 078 629 973 AFSL 245451, each of which is a member of the IOOF group of companies. IOOF does not guarantee or otherwise accept any liability in respect of Consultum Financial Advisers Pty Ltd or Godfrey Pembroke Group Pty Ltd or any services provided by them.