Optima Blog

Embracing the Next Generation in Wealth Management

Trillions of dollars are expected to pass down from ‘Boomer’ parents to their heirs over the next 25 years in the great wealth transfer, and advisors who establish relationships with their clients’ children will be better positioned to retain these assets. 

Delivering value-added, educative communication on topics the next generation can relate to is an effective, low-cost way to create trust and build connections for the future. Here are four ways to leverage your insights to reach the next generation.

1.Use email. When you meet with clients, ask if you can send their adult children information about wealth management. Create a targeted ‘next generation’ email list and periodically share your thoughts on a range of relevant topics such as ESG investing, philanthropic giving, tax-advantaged savings, debt management, launching a business, and negotiating a salary.

2.Update your website. Every email should have a strong call to action that includes a link to your website so that recipients can learn more about you. In addition, emails should be reformatted and posted to your website so that those who may have missed previous emails can find them there; and website visitors who are not on your email lists see that you have expertise on issues important to them.

3.Be social. Informative social posts and videos reach this audience where they get their news: on Instagram, Twitter, LinkedIn, Facebook, and YouTube. Invite clients and their families to follow you, and post information that can help them achieve their goals. 

4.Hold events. In-person and virtual events allow you to get to know your clients’ adult children and for them to get to know you as a reliable source of information about wealth planning. When the time comes for them to inherit your clients’ wealth, they will feel confident that you understand their situation and have what it takes to guide them. 

It’s Just a Formality

Have you ever called to make a doctor’s appointment and answered multiple questions about why you’re calling? At the appointment, they hand you eight pages of overly Xeroxed forms with the same questions you already answered. Then the nurse or doctor again asks you the exact questions that were on the form. This is what we would call a bad brand experience.

Scenarios like this happen in wealth management as well. Forms are the last thing firms think about as brand building material. But if they are cumbersome (a nice word to describe ugly and difficult) as well as ask questions you’ve already answered they leave a bad impression. Tedious is not the way you want to be described when onboarding a new client. 

Formulating tips:

• Collect only the information you really need

• Don’t use decorative fonts on a form (those are reserved for elementary school forms)

• Don’t send electronic forms that are in Microsoft Word. Once your client starts typing, Word shifts everything and sometimes makes forms illegible

• If you are going to use Word to build the form, create a PDF so the fields stay static when the form is filled out

• Give your forms some air; put space between questions, margins on the page that are at least 1 inch, and sufficient line spacing

• Don’t use a form that has been photocopied so many times that it looks like it was made in the 80’s — the content ends up a little crooked, some words are bulky or smudged (you know these forms, they usually come from your kid’s elementary school)

The best format
Your forms are an extension of your brand. Ideally, have them professionally designed and made into a fillable PDF. That way, your client can fill them out electronically or print them. Include only your logo, page numbers, and easy-to-understand questions that do not include a lot of financial lingo that a client may not understand. And remember, you also benefit from a well-designed, well-thought-out form — all the information you need will be easily accessible. If you can’t have them designed, research and review some of the online form-building applications.

Forms are the last thing companies consider when thinking about their brand. But every touchpoint with your client can strengthen or weaken the client experience and their perception of your firm.

Are Your Clients Ready to See You Again?

Why not ask them? One of the critical issues that organizations in every industry are grappling with is getting together in-person. Gatherings could be meetings, group presentations, social gatherings, or even conferences.

With the macro landscape constantly shifting, it’s difficult to know what activities people are comfortable resuming. Rather than guessing or deciding on behalf of your clients, a little research may be in order. Many schools, religious organizations, and other institutions are polling their “clients” to ask this same question, and it equally applies to wealth and asset management companies. Conducting research can have benefits beyond just getting information related to the targeted topic. We find that it:

Increases communication. Whether it’s a one-on-one interview or a focus group, research provides one more way to connect with your clients. This helps keep your firm top of mind in a positive manner.

Builds buy-in. By asking your clients what they think and want, they know their voice was heard. They feel like they contributed to the end product, making it more likely to be enthusiastically accepted.

Creates a sense of partnership. Research helps to build a sense of camaraderie and community. This helps to build client loyalty and foster retention.

Uncovers unknown perspectives. Regardless of what you are researching, in our experience, one always discovers thoughts, suggestions, or opinions that are unexpected, even though clients often assume you know.

A bit of research can go a long way to improving client satisfaction. Of course, regardless of what the results tell you, it’s always important to be sensitive to the individual client’s preferences. If his or her preference is to stick to Zoom, even though most people want to meet in-person, then Zoom it is!

Don’t Ignore the Mass Affluent

For many advisors, addressing the needs of the mass affluent is not high on their priority list. Many choose to focus their efforts on serving the more complex needs of the HNW and the UHNW segments.

Many believe the mass affluent segment tends to be DIYers when it comes to investing and, therefore, are better served by a robo offering than a traditional full-service advisor. In fact, a new report by Phoenix Synergistics titled, The Mass Affluent and Evolving Investment Strategies corroborates what many of these advisors believe – at least partly. 

The report finds that more than half of mass affluent investors, defined by Phoenix Synergistics as individuals with between $100,000 to $1MM in AUM, indicate an independent approach to investing, with those in the 18 to 49 age segment significantly more likely to report an independent approach. However, as the chart below shows, a solid majority (74%) of mass affluent consumers consult some type of financial advisor.

Furthermore, according to the report, 84% of mass affluent consumers indicate they need financial advice or guidance related to some type of financial goal or purpose. The most common type of advice relates to retirement accounts/planning and helps with selecting savings/investment options. Mass affluent consumers also expressed fears about the pandemic and how it will affect their investments. Some, particularly younger mass affluent consumers, expressed an interest in either reallocating investments to more-secure insured accounts, reallocating funds to less-volatile holdings, or selling holdings to avoid further losses.

Clearly, many financial advisors will continue to find HNW and UHNW individuals to be their most prized clients, well suited to take advantage of the breadth of services offered. A product, sales, and service targeting the mass affluent, of course, requires different resources and solutions. However, for those advisors that develop a mass affluent offering that can be delivered cost-effectively and profitably, they may be able to realize a significant opportunity.

The Cleveland Indians Guardians

Change is difficult, especially for sports fans who religiously worship their teams and don apparel with their logos. So it’s not surprising that when the Cleveland ‘Indians’ management recently announced the team will become the ‘Guardians’ after this season, the rebrand was met with mixed reaction.

Team owner, Paul Dolan, said the decision was spurred by the team’s desire to do the right thing. And many fans are quite supportive. However, others believe the new name takes political correctness too far. While only time will tell how successful Cleveland’s new name will be, here is what we believe management is doing correctly, and how its strategy can be applied to rebranding financial services.

1.    Management knows its audience. About 40% of Major League Baseball fans are minorities,* so the team wants to be inclusive and respectful. In addition, the team conducted market research before choosing the new name, speaking with fans and civic leaders about what it means to be from Cleveland. Loyalty, pride, and resilience were the characteristics most cited and guided the team’s selection of the ‘Guardians’ name, along with inspiration from the Guardians of Traffic statues on the Hope Memorial Bridge, just outside Progressive Field. Cleveland pride informed the decision to emphasize ‘Cleveland’ as the best part of the team’s name.

2.   Management retained what was working. To maintain a level of familiarity, management kept the same red and blue color scheme and similarly angled script font. The ‘Chief Wahoo’ logo was removed from the uniforms in 2018 and replaced with a new logo inspired by baseball and the wings on the guardian statues.

3.    Management communicated with empathy. In a video sympathetically voiced by the very likable Tom Hanks (a big Cleveland baseball fan and star of the 1992 baseball movie “A League of Their Own”) that was shared on social media, the team took a position of unity and inclusivity, giving a nod to their community as ‘forward looking’ and a ‘city on the rise.’

The decision to rebrand should not be taken lightly, whether you are running a sports team or a wealth management firm. Although you may have established equity within your brand, times change. If your brand no longer represents your mission or differentiates you from the competition, it may be time for a refresh. A successful rebrand will resonate with your audience, keep what’s not broken for familiarity, and let constituents know why and how the change will take place. It also helps to win, and if Cleveland wins the World Series, all will be forgiven.

Show How You Feel

Above: Microsoft’s new emoji designs are announced ahead of World Emoji Day 2021.

Did you miss the World Emoji Day celebrations on July 17th? Don’t worry, we’re not sure there were any! But it happened regardless and takes place every year on July 17th, so you might want to mark your calendar for 2022.

Adobe released its 2021 Global Emoji Trend Report on (you guessed it 7/17). It surveyed over 7,000 emoji users worldwide and found that the top five favorite emoji are:

55% are more comfortable expressing emotions through emoji than phone conversations

Some facts about emoji:
• They were originally the idea and design of Japanese artist Shigetaka Kurita to convey simple information. In 1999, the set looked like this:


• The Unicode Consortium, a nonprofit United Nations type of group for text standards across different computers and platforms, regulates and manages the approval of emoji

• Anyone can submit an idea for an emoji to be included in the next versions of Unicode and Emoji (both currently on version 14.0)

Emojipedia.org is the source to find the meaning and background of every emoji. 

It’s all about communication
Emoji are important because they give us a way to communicate emotion when our words may not be saying exactly what we want. How many times have you sent a text thinking it sounded a little curt and decided to include an emoji? Just the simple use of a heart helps make up for the limitations of electronic messaging and the lack (or misunderstanding) of emotion. The very concept of the emoji goes back to the idea that a picture paints a thousand words, which makes emoji useful since no one wants to write or read a thousand-word text.

Bottom line, emoji sprang from the desire to communicate easily and quickly. As humans, even those tirelessly on their smartphones, our natural tendency is to communicate. 

Some additional insight from the Adobe Global Emoji Trend Report:

Global emoji users believe:
88% are more likely to feel empathetic toward someone if they use an emoji

67% think that people who use emoji are friendlier, funnier, or cooler than those who don’t

71% feel that using emoji at work positively impacts likability and credibility

Waiting for a Crypto ETF

Last spring, Brown Brothers Harriman released its 2021 Global ETF Investor Survey which measures current trends in usage, selection, and demand for ETFs. The table below from that survey indicates the strong interest shown by investors worldwide in having options to invest in cryptocurrencies in an ETF structure. 

It seems clear that more investors are recognizing the growth potential of cryptocurrencies but would like a relatively less onerous way of investing in them that offers liquidity and potentially greater diversification.

Unfortunately, investors in the U.S. will have to wait a bit longer for a cryptocurrency ETF to make it to market. Late in June, and for the second time, the SEC extended the review of Van Eck’s bitcoin ETF, the first such offering in the queue. The SEC extended its review process, requesting further comment from interested parties on how its rule change could impact markets. SEC Chairman, Gary Gensler, remains concerned that cryptocurrency exchanges lack oversight and may be subject to fraud and manipulation. For now, investors are left with two options in terms of publicly traded vehicles, the Grayscale Bitcoin Trust which is a closed-end fund available to accredited investors, and a growing list of ETFs that invest in companies in some way associated with the blockchain. The oldest and largest of these, the Amplify Transformational Data Sharing ETF (BLOK) was introduced in 2018 and is now just over $1B in AUM.

While it’s anyone’s guess when a true cryptocurrency ETF will come to market, it’s likely that demand coupled with more stable markets will likely result in such products being available relatively soon. A number of well-regarded players have prototypes on the shelf and pent-up demand will probably help early entrants grow quickly.

HNW Want it Their Way

Capgemini recently released its 25th World Wealth Report. Among its observations and conclusions, which included the fact that over the past five years North America has overtaken Asia Pacific in terms of population and total wealth, were several others of note.

The pandemic crash was unlike others
In a typical post-crash environment, HNW investors take a risk-off approach, generally shifting to fixed income, cash, and other less risky investments. This occurred after the tech bubble of the early 2000s and the financial crash of 2008/2009. Interestingly, this did not occur after the Q1 meltdown of the markets as the pandemic shut down the global economy. In fact, cash holdings decreased slightly, while alternatives and real estate rose. One potential reason may be, since there wasn’t an underlying financial crisis or weakness, the expectation that the real economy would reopen and recover relatively quickly once COVID-19 was under control.

HNW investors want more involvement, especially when the markets are doing well
Investors want the most involvement in their portfolio during bull markets, reflecting an “anyone can do it, can’t lose” attitude. When markets are volatile or negative, however, investors are more likely to seek and value professional advice, looking for transparency, risk management, a rigorous process, and a goals-based approach. Wealth managers must be prepared to accommodate investors’ needs and attitudes in different environments, adapting a dynamic “hybrid” approach that allows clients to choose the model that works best for them at different points in time.

It’s not all about digital
There is no doubt that advances in technology and the ability to serve clients virtually have fundamentally changed the service model for all investors. However, at the same time, HNW clients increasingly demand a highly personalized experience, with “real” people as well as digital access, that is tailored to their specific situation, needs, and preferences. Organizations that can deliver high-quality omnichannel sales, service, reporting, and value-added communications will be the winners.

Competition is everyone
HNW firms face competition from both traditional players and non-traditional players from all over the world. This includes traditional asset managers, banks, trust companies, brokerages, RIAs, insurance companies, and online offerings. As the line becomes increasingly muddled between what firms really are due to acquisitions, partnerships, and alliances, it will be increasingly difficult for single offering, stand-alone entities to succeed.

The wealth management industry continues to grow and evolve rapidly, impacted by both micro and macro factors. Firms that succeed will be those that recognize and embrace the changing dynamics of wealth.

Combatting the Great Resignation

For many firms across various industries, developing and implementing a hybrid or flexible work model is top of mind. And, according to Microsoft’s Work Trend Index: 2021 Annual Report, implementing a hybrid model is not a passing accommodation – it is here to stay. 

Source: Microsoft Work Trend Index Report 2021

The Great Resignation
As many employers begin implementing and employees begin adjusting to hybrid work models, the looming threat of ongoing resignations is putting increased pressure on employers. The U.S. Bureau of Labor Statistics recently announced that 4 million people, or 2.7% of U.S. workers, quit their jobs in April. And, according to the Microsoft report, 41% of the global workforce is considering leaving their current position in the next year. The report also points to a number of pandemic-related issues that may be contributing to this potential mass exodus, including an exhausted workforce, digital overload, and a shrinking social network.

Stemming the Tide
Employers need to be cognizant of these pandemic-related issues that continue to affect workers. Employees should be given ample notice of any change in work arrangements as they may be dealing with childcare concerns, transportation issues, or other circumstances that affect their ability to return to the office immediately. Steps should be taken to begin alternating virtual meetings with in-person meetings to help ease the effects of “Zoom fatigue” and broaden workplace networks. Employers should also look to bring more transparency, openness, and authenticity to the workplace as a way to reengage with their employees. According to the Microsoft report, people who interacted with their coworkers more closely than before, even though mostly virtually, not only experienced stronger work relationships, but also reported higher productivity and better overall wellbeing. 

It remains to be seen how employees will react to the new normal of hybrid work models. We believe leading employers will consider the many factors involved in bringing workers back to the office and devise innovative strategies to reengage employees while also driving higher levels of productivity.

Proving Your Worth

Although you may speak with clients regularly about their goals and investments, you may not be aware of all they expect from you, and they may not be aware of all you do for them ‘behind the scenes.’ In addition, according to research conducted by Morningstar,* client and advisor priorities are not always aligned. 

Providing informative thought leadership helps you educate clients about what you do and get on the same page with them in terms of priorities. It also allows you to deliver more of what investors want, including a knowledgeable advisor who “Communicates and explains financial concepts well,” near the top of their list.

Source: Morningstar

Thought leadership helps you demonstrate your expertise in a client-benefit oriented manner
Even clients who are successful executives, professionals, or business owners may know little about wealth management or investing. Thought leadership allows you to teach clients about the basics (including the role you and your firm play in helping them achieve their goals), demonstrate that you have the relevant skills and knowledge, and build trust and goodwill.

Thought leadership helps you align values
Many investors think their advisor should be maximizing their returns. Information about asset allocation, risk, reward, and rebalancing will help clients better understand the end goal and appreciate your role in creating a tailored investment strategy aligned with their objectives. They also don’t think they need your guidance to stay the course even though the average investor underperforms the stock market due to unsound decision-making. Information about the risks of emotional investing will heighten their appreciation of your long-run approach.

Thought leadership is a valuable tool for educating clients about wealth management. It provides context that builds trust, guides expectations, and helps clients understand the value of what you deliver.

* Source: The Value of Advice: What Investors Think, What Advisors Think, and How Everyone Can Get on the Same Page, The Investor Success Project, Morningstar.