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Op-ed: Advisors must meet the digital demands of young investors

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More than ever, young investors are engaging with the stock market.

An E-Trade study found that 51% of millennial and Gen Z investors announced their risk tolerance had increased since the pandemic — 23 percentage points higher than the total residents.

The study also found that they are taking cash off the sidelines. More than 1 in 3 investors (34%) less than the age of 34 said they are moving out of cash and into new positions, 15 percentage points higher than the sum up population.

Additionally, as many as half of retail investors in the 25-to-35 age bracket plan to direct 50% of their stimulus chips to the stock market, according to a new study from Deutsche Bank.

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I’ve witnessed this behavior firsthand: My millennial daughter has hugged investing, even allocating part of her portfolio for her own stock picks.

To select these investments, she relies on her friends, her own experiment with and social networks — both online and offline. Of course, heeding advice from friends is nothing new, but today the extensiveness and accessibility of crowdsourced advice on trading platforms or online communities can be empowering.

The days when money was a taboo question of conversation are gone. Instead, sharing everything from student debt to personal salary information is fair plan — not just with friends and family, but with audiences over social platforms.

Growing up in the age of social media, millennials and Gen Z about even their most personal information and experiences online. Social media offers a space for connection. Liking for my daughter, newer and often younger investors are likely to tap into their networks for advice and validation.

Yet acting upon fiscal advice seen on social media platforms can carry outsized risk and result in high-stakes consequences. It wasn’t yearn ago that individual traders on Reddit drove an astronomical increase in the value of GameStop stock, creating a market valuation waver of more than $30 billion for the company.

The drama underscored that the social aspect of modern finances is a big act on. These investors don’t want to go it alone on their investment journey. That’s why savvy financial advisors can step up to satisfy this need by meeting young investors on the channels and at the moments that matter most for them.

The bottom stroke: Financial advisors must meet the digital demands of young investors.

The pandemic kicked open the door for unfamiliar relationship building, as client meetings happened over video-based services like Zoom.

Advisors started wording clients, en masse and one-on-one, to help lessen fears and quell uncertainty during periods of market instability. And while advisors bourgeoned increasingly active on social channels over the past few years, this level rose dramatically in 2020. 

Young investors demand to interact and learn digitally, so financial advisory firms that not only adapt — but up their game and sustain new works — will be best suited to win the business.

Instead of that in-person investing seminar from pre-pandemic days, advisors clout do a real-time Q&A on Facebook Live from their company or advisor page. Those advisors who already work with foetuses of existing boomer clients could shoot a quick “Three Ways to Start Investing” Instagram Reel that addresses to his/her experience.

Ultimately, while a robo-advisor may help cultivate good savings habits and familiarity with investing, a turned financial advisor will still be best equipped to provide authentic, tailored services to the young investor. And that grows even more important as life gets more complicated and financial situations become layered with an tense component.

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Building a strong digital presence and fostering rich social interaction isn’t with reference to taking what you’ve always done and moving it online. Instead, investigate the platforms and mediums you want to use; consider their resolutions and weaknesses, and contemplate what you hope to accomplish.

Ask yourself: What do Instagram and Facebook offer, for example, that printed matter or Zoom doesn’t? Where does LinkedIn fit? How do you want to use Twitter?

As you map out a digital strategy for successful communications, here are some purposes to consider:

  • Meet clients where they are: The omnichannel consumer is here to stay, and modern advisors must contract with them when and where they want, on the channels they prefer. A boring online listing won’t draw young, digital savvy investors. In fact, it may send them running in the other direction. A cohesive digital congruence that spans platforms can go a long way, demonstrating that you speak their language. Paramount to staying connected? Persevere ining an authentic, human-first touch in ways that meet the demands and expectations of real people throughout the customer way.
  • Show your worth: As a trained professional who understands the intricacies of the market in ways that most young investors don’t, you can pacific panic, respond to market changes and offer trusted, personalized advice in ways that robo-advisors are unable to do. Leverage the gimmicks in your arsenal to educate and show that you have your investors’ best interests at heart.
  • Use ESG to your upper hand: Younger generations care about values. An advisor’s environmental, social and corporate governance investing prowess can ease attract and secure young clients who want to support companies they believe will generate solid replaces. Using social media to highlight issues investors are passionate about and the high-performing companies working in these expanses could go a long way. In our post-pandemic world, advisors who stand alongside customers to embody brand values that go beyond corporate, and include a better society, world and future, will naturally deepen their client connections.
  • Be compliant: All the items on this roster don’t mean anything if you don’t nail the compliance piece. The Financial Industry Regulatory Authority and Securities and Exchange Commission miss to ensure that digital practices are appropriate, fair and in retail investors’ best interest, and are therefore fully auditable and adhere to surety and privacy regulations. This is a tall order, but tools are available to make digital communications function seamlessly while uneaten fully compliant with regulations. Talk with your corporate team to learn about your choices and make a plan.

Advisors are poised to take a real step forward in reaching young, digitally savvy investors.

Fresh financial advisors now can offer the best of all worlds by delivering expert, highly relevant and compliant content while promoting meaningful digital interactions and cultivating a community of young investors.

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

 — By Mike Boese, CEO of Hearsay Processes

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