Due to a few early adoption successes and much in the way of positive publicity, robo advisors are oft thought as the way into the massive millennial market. With low minimum investment thresholds and little in the way of fees, they are viewed as an inexpensive way to access a consumer segment that is just starting to save and invest. Case in point: One of the major stand-alone robo vendors reports that 60 percent of its customers are younger than 35.
The millennial market is notoriously fickle, so brands need to work extremely hard to foster loyalty, especially those within the financial services arena where many millennials still harbor distrust after the Great Recession. Given their inclination towards conducting independent research and securing the best deal at the most convenient time, it’s not hard to envision a near-future where millennials move from robo advisor to robo advisor without hesitation.
But how can firms humanize the robo experience, technologically modernize the traditional one, and facilitate the migration of millennials from the former platform to the latter as their wealth grows and their financial situations become more complex?
One technological solution that can help bridge this gap and strengthen a firm’s competitive advantage is sales enablement. Sales enablement provides automation that connects and synchronizes marketing and sales teams in a unified, end-to-end process. This process makes it easy for relationship managers, advisors and other client-facing staff members to identify their best opportunities, and develop and execute an effective sales strategy for each of them.
Going forward, we anticipate that a significant portion of technology spend in the wealth management space will be geared toward attracting and retaining millennials. This will include mobile- and social-based platforms as well as robo ones. As a technology, robo advisors align well with the expectations of millennials, but in terms of establishing a completely credible relationship, apprehension hinders progress: A recent Capital One Investing report shows that 31 percent of millennials are skeptical of the algorithmic accuracy of robo advisors.
Eliminating this doubt requires transparency and the type of directly impactful communication that robo advisors seem to lack. And as much as millennials value time and choice, they also appreciate the benefits of a highly personalized, dynamic experience, something robo advisors only partially deliver. At the same time the key advantages of robo-based accounts—low costs and low minimums—make them generally uneconomic for most advisors to oversee on an individual basis. The strategy for most firms is to use robos to get younger investors in the door with the hope that their accounts will grow over time, encouraging them to turn to traditional advisors for a broader range of planning services.
By establishing a more personal relationship at the robo phase and providing a clear migration path to the next level of client communication—interacting directly with the advisor—sales enablement can support both wealth management entities while appealing to millennial investors. These cloud-based platforms can collect data from multiple sources—client information from CRM databases like Salesforce, product and investment strategy recommendations from in-house experts or third-party sources like Morningstar, and portfolio data from the advisors themselves, robo or not—to generate highly personalized client communications and reports at a low cost. This can include everything from monthly account summaries to specific investment recommendations based on client age and family circumstances. This can all be delivered in multiple formats and across various platforms congruous with the content consumption patterns of millennials, who generally prefer an omni-channel experience.
Sales enablement systems can be used to direct customized content, including educational resources, to a robo-based investor according to their specific needs and interests. For example, if an investor wishes to eventually migrate away from a robo advisor, sequentially distributed content articulating the benefits of traditional active management can help facilitate the transition. This functionality is particularly pertinent as the earlier cited Capital One Investing report also found that 60 percent of millennials feel they lack the knowledge and experience necessary to invest with confidence. (And it’s not just for the robo clients; once deployed it can introduce similar efficiencies across the organization, reducing the time needed to generate and disseminate materials and free resources for more productive marketing and client development activity.)
What’s more, many of these systems are interactive, providing feedback to the home office as to what is read and what isn’t. An advisor overseeing a robo account can keep an eye on that activity and, when the account owner begins to explore new ideas as a result of the educational content they are receiving, reach out with specific recommendations that can help move the relationship to the next level.
Wealth managers targeting the emerging generation of investors understand that the millennial market is highly selective, and they are coming of age in a period of broad-based leeriness of the markets. Robos provide an effective entry point but are unlikely to be sufficiently sustainable for growing a firm’s business, as wealth managers are still an invaluable resource for investors; but pairing robos with sales enablement can go a long way to establishing the basis for a long-term, and profitable, relationship with millennials.
Craig Dunham is Vice President and General Manager of financial services at Seismic.