Advising Aussie’s biggest wealth transfer

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Within the next 20 years, 70% of Australia’s financial assets will be held by Generations X and Y.

This is a fundamental shift for the wealth management sector, and advisers will need to adapt their offering if they expect to have a stake in the wealth of approximately nine million investors.

Currently, only around a third of the nine million Gen X and Ys, dubbed the ‘digital investors’, are getting financial advice. This is according to The Digital Investor, a report released today by Telstra. More than half of the digital investors were influenced on what planner they used by friends or family.

Friends, family and employers are also influencing what super fund the digital investors choose, with 51% relying on advice from employers and 23% relying on friends and family, when transferring to a new fund.

Author of the report, Telstra Group general manager, Rocky Scopelliti says that this provides a massive opportunity for advisers, if they can figure out how to turn current clients into advocates for their services.

“It’s quite an interesting area because it presents itself as a double-edged sword,” says Scopelliti. “On the one hand, how do you look after baby boomers and also prepare yourself to service customers that are going to be critical to you going forward.”

He says that too many wealth managers view this as ‘tomorrow’s problem’, when it should be considered ‘today’s opportunity’.

Super funds are already making the connection between the role of advocacy and how they structure their products and services. Scopelliti says one super fund manager is capitalising on the advocacy by creating a family-based super product.

There are a few other ways that advisers can appeal to the new digital investor. The most popular concept introduced in the report, was educational videos online. Scopelliti says investors are looking for more engaging material, and educational videos fit the bill.

Alert services to track investments were also considered ideal, followed by online collaboration with an expert using chat, video or voice. However, dealer groups are holding advisers back, according to the report. Advisers are increasingly frustrated with the failure of dealer groups to keep up with the technological evolution.

“We were pleasantly surprised by how well equipped advisers were – they were very well equipped when it came to technology such as smart phones, technology such as tablets and laptop computers," says Scopelliti. "Where there probably needs some increased focus is on the software side, to have it prepared so that it can be delivered through those kinds of wireless devices.”