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Younger Investors Pick Advisors Based on Marketing, Not Referrals, Survey Finds

Digital Marketing is King

July 14, 2024

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Happy Sunday everyone, and welcome to Benzinga’s financial advisor newsletter.

Today we’re covering a new survey that finds investors under 60 are much more interested in picking their financial advisors based on marketing, not referrals. The implications, as you can imagine, are huge for advisors looking to grow their business.

So, let’s get into the Industry Chatter!

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INDUSTRY CHATTER

A recent survey by Ficomm Partners reveals a significant shift in how younger investors choose financial advisors, moving away from traditional referrals towards digital marketing. This trend suggests a transformative change in advisor acquisition strategies in the coming years.

The survey, which included 1,107 consumers (52% women, 47% men), found that while 60% of respondents over 60 would only hire an advisor through a referral, this drops to 29% for those nearing retirement and just 17% for those under 44. Conversely, 45% of near-retirees and 57% of under-44s reported hiring advisors based on digital marketing, compared to only 20% of older respondents.

Digital Habits are Set in Stone

Megan Carpenter, Ficomm's CEO, notes that these younger cohorts' habits are unlikely to change as they age, given their comfort with digital research and purchasing. This shift indicates that relying solely on referrals for organic growth may become increasingly ineffective.

The survey highlights that no single digital channel dominates; instead, a mix of digital tactics is crucial. 64% of effective marketing tactics were digital, with consumers requiring at least two digital interactions before responding, ideally five or more.

Time to Branch Out from Referrals

While referrals will remain an important lead source, they can no longer be the exclusive method. To stay competitive, advisors will need to implement integrated, multi-tactic digital marketing strategies.

The survey sample predominantly included individuals with annual incomes below $149,000 (82%), while 17% earned over $150,000 annually.

This research underscores the evolving landscape of financial advisor selection, emphasizing the growing importance of a strong digital presence and marketing strategy. As younger generations accumulate wealth and seek financial guidance, advisors who adapt to these changing preferences are likely to have a significant advantage in attracting and retaining clients.

WHAT THE PROS ARE WATCHING

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Our platform empowers you to monitor big moves in real-time, allowing you to react swiftly to market shifts and keep your clients informed and confident in your expertise. Whether you're tracking specific stocks, sectors, or market indices, Benzinga Pro provides the tools you need to stay informed and proactive in managing your clients' portfolios.

Say goodbye to manual tracking and hello to efficiency with Benzinga Pro's intuitive interface and customizable features. Join thousands of financial advisors who rely on Benzinga Pro to enhance their advisory services and drive better outcomes for their clients.

MARKET RECAP

Daily newspaper economy stock market chart

Consumer price index data this week provided encouraging signs that American inflation is moving ever closer to the Federal Reserve’s much-discussed 2% target.

This fueled speculation about interest rate cuts.

The annual inflation rate dropped more than expected to 3% in June 2024, reaching its lowest level since March 2021. Remarkably, the monthly inflation rate showed a contraction of 0.1% for the first time since May 2020.

Investors and economists increased their convictions on the Fed's readiness to cut interest rates in September, pushing market-implied odds of a cut to over 90%.

A higher-than-expected producer inflation data report Friday did little to alter these expectations significantly, as the latest consumer sentiment report from the University of Michigan confirmed subdued morale and a decline in inflation expectations.

In the markets, sectors previously impacted by high interest rates — and have not yet priced in potential reductions in borrowing costs — outperformed the tech sector, which had already largely anticipated such rate cuts.

The equal-weight S&P 500, as tracked by the Invesco S&P 500 Equal Weight ETF (RSP) outpaced the cap-weighted S&P 500, monitored through the SPDR S&P 500 ETF Trust (SPY), while value stocks outperformed their growth counterparts.

Both the real estate sector — as tracked by the Real Estate Select Sector SPDR Fund (XLRE) – and the Russell 2000 small-cap index — as replicated by the iShares Russell 2000 ETF (IWM) – achieved their strongest week of the year.

You might have missed:

Rare Market Dynamic: On Thursday, the Russell 2000 surged 3.63% while the Russell 1000 large-cap index fell 0.66% — the fifth time in history that the performance difference between the two indexes exceeded 4%. It has previously occurred during major market downturns. This time it came near an all-time high for the S&P 500.

Weight-Loss Pill: Pfizer Inc. (PFE) announced advancements in its once-daily weight-loss pill, danuglipron, showing a favorable pharmacokinetic and safety profile. The pharma giant plans to conduct dose optimization studies in late 2024.

Tech Stock Poll: Apple Inc. (AAPL), Microsoft Corp. (MSFT), Meta Platforms Inc. (META) and Alphabet Inc. (GOOGL) all hit 52-week highs. A Benzinga poll reveals investor preferences:

  • Microsoft led with 32%

  • Apple at 29%

  • Google at 23%,

  • Meta at 16%.

Investors cited artificial intelligence growth potential and valuations as key factors influencing their choices.

LEARN WITH BENZINGA PRO

THE WEEK AHEAD

Economic Data

  • Monday: Fed Chair Powell speaks

  • Tuesday: June Retail Sales Reports

  • Wednesday: Crude Oil Inventory report

  • Thursday: Philadelphia Fed Manufacturing Survey

  • Friday: Fed Boardmembers Bostic and Williams speak

Earnings

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