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With the rise of millennials and Gen Z in the financial industry, the traditional “door-knocking” approach to reaching investors is outdated. This shift away from traditional service tactics presents opportunities for the industry to connect with a new generation of customers in more meaningful ways.

Axtella's network of firms – including their independent broker-dealers, Sigma Financial Corporation and Parkland Securities LLC, and their RIA, Sigma Planning Corporation – are focused on cultivating close-served tactics for end investors, which also make the lives of financial professionals easier.

First, there is a need for better customer communication technology. According to AdvicePay, nearly 80% of millennial and Gen Z investors are more likely to consider working with a professional who uses the latest technology.¹ This means that new investors are more likely to expect a seamless user experience when working with third parties.

One obvious industry solution to adapting its communication methods is to increase consistent messaging – something Axtella has also seen resonate effectively with a wider investor demographic.

Matching messaging gives investors a digital communication option outside of traditional phone calls or in-person meetings. In addition, financial professionals can increase their customer engagement and improve their operations, alleviating the monitoring burden and ensuring compliance with regulatory standards.

Similarly, the industry is also looking at new service models to reach younger demographics. Not all millennial and Gen Z investors want to stick with traditional payment models, such as those where financial professionals receive a percentage of their assets under management. This requires service model options that meet changing investment needs.

One advice model gaining traction among younger investors is the fee-for-service model, which can be compared to the “Netflix of financial planning.” This model positions financial advice within the realm of paid monthly subscriptions.

AdvicePay also highlighted the popularity of this model among millennial and Gen Z investors, saying they would prefer to use a fee-for-service model instead of paying a percentage of their AUM.²

In essence, the shift to the Fee-for-Service model represents a paradigm shift in the way financial services are delivered and perceived. By offering a familiar subscription-based structure, a firm can demystify the concept of financial planning and create a broader and more accessible range of engagement models that offer flexibility and customization options.

When embracing this model, financial professionals can not only adapt to the changing needs of investors, but also position themselves as partners in their clients' financial journeys. As new investors' assets grow over time, they can “graduate” up to different client models that match a sense of increasing complexity, creating the potential for long-term clients for professionals.

Rather than relying on outdated practices, our industry is evolving to meet end investors where they are and improve their experience to minimize perceived barriers to entry. Tactics such as tailored messaging and fee-for-service models provide access, affordability and personalization that align with the latest consumer preferences.

For more information on how Axtella is revitalizing wealth management for investors and its professional network, visit www.axtella.com.

_{1, 2 AdvicePay, 2024 Fee for service industry trend report}