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Written by: Kyle Hiatt | Orion Advisor Services
Whenever an industry starts to transition, it can be difficult to describe the changes occurring or to create a lexicon of easily understood terms. The advisory industry has reached a maturation and evolution point where the “nextgen” advisor is beginning to receive widespread attention.
Unfortunately, there doesn’t seem to be as widespread an understanding of just what makes an advisory firm “nextgen” and, as a result, confusion can be found throughout the industry.
However, it’s important for an advisory firm to know how to be a “nextgen” firm, because as investors themselves fall into a common definition of “nextgen” (under forty years old), advisory firms need to position themselves to serve those investors well, and grow with purpose.
So, let’s first clean up definitions, and understand how to become a nextgen advisory firm.
Here are four things we think make an advisory firm nextgen, and four things that don’t.
WHAT IT IS
TECHNOLOGY-CENTRIC ADVISORY FIRM
To be a nextgen advisor is to embrace modern technology and the efficiency it can give your firm . Running portfolio accounting software that looks like it came from Windows 95 is no longer an option for firms that want to attract top-of-the-line, upcoming advisors, and it won’t help when you’re trying to land up-and-coming investors either.
CLIENT EXPERIENCE-FIRST IN ALL PHASES OF BUSINESS
A nextgen advisory firm puts the client experience first throughout their business, and they use technology to assist in that endeavor. With a portfolio accounting platform like Orion, an advisory firm can offer clients customized views in their client portal , mobile app , and personal statements –either on paper or by video. However a client wants to access their information, the nextgen advisory firm can offer it to them. That’s the power of a client-first experience that Orion can offer.
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FOCUSED ON MARKETING WITH DIGITAL INTERACTIONS – PRESENT ON SOCIAL MEDIA
A nextgen advisory firm extends itself beyond hosting a seminar and dinner every few months for interested investors; these firms are present online and work actively to put themselves in front of new prospects with marketing focused on investors’ needs. Nextgen firms are also present on social media sites like Facebook and Twitter .
A FIRM WITH A COMPLETE AND CONCRETE GROWTH PLAN
The nextgen advisory firm doesn’t just operate in the present with modern technology tools, it also operates with an eye to the future. Using KPIs and business intelligence data , like the information provided in Orion’s Trends app, allows nextgen advisory firms to set concrete growth goals and know what they need to do to find success. And, as they’re looking forward, a nextgen advisory firm has their own future planned out with a succession plan and advisors qualified to take over the firm in the next decade or two.
WHAT IT ISN’T
A ROBO-ADVISOR OFFERING
A nextgen advisory firm might be big on technology, but that doesn’t mean it’s an online-only firm or it necessitates including a robo-advisor solution. If you can’t or don’t want to add an online new accounts option, that’s ok. Orion has the tools you need to help with online account opening , but if you don’t operate that way, it doesn’t mean you can’t be a modern advisor.
A TEAM OF ONLY ADVISORS 40 AND UNDER
A nextgen advisor might mean a younger professional, but a nextgen advisory firm does not have to be full of young pups. You might have one advisor under forty, or you might have none. The quotient of young professionals on staff has no bearing on your firm’s ability to utilize modern technology and reach new investors with effective outreach.
LOCKED INTO A SPECIFIC INVESTMENT STRATEGY
Nextgen advisory firms don’t all utilize one specific type of investment strategy. The management strategy a firm utilizes has no effect on whether or not it’s considered nextgen. So whether you’re telling investors to hold onto their assets for the next thirty years, or you’re rebalancing with every calendar flip, the definition of a nextgen firm can differ among each advisory firm.
AN ONLINE-ONLY WORKPLACE
One of the big trends across many industries is the integration of remote employees, or allowing in-office employees to work from anywhere. While this is a nice perk for many employees (especially millennials, who value freedom at work), it’s not a requirement for a modern advisory firm.
Some organizations take the idea of remote employees a step further and lack any sort of physical office at all. While remote offices can work in some industries, the financial services industry is very much focused on information security and trust, and many investors want a physical location where they can meet with their advisor and feel a sense of home and being grounded. Some advisory firms can make this work, obviously, but having the flexibility to run virtual meetings and being required to be all-virtual, all the time, are not the same thing.
As your firm looks ahead to the next five to ten years, how do you see yourself growing and positioning yourself in a changing industry landscape?