Now that 2015 is in full swing, brokerdealers are looking expand their client bases. At a roundtable hosted by InvestmentNews, brokerdealer leaders discussed what their plans are for the New Year.

It’s a new year, but independent broker-dealers are looking far beyond 2015 as they manage both ongoing challenges and emerging opportunities in their industry.

InvestmentNews recently hosted a roundtable of IBD industry leaders to discuss the future of their business. With a huge transfer of wealth expected over the next several decades — estimated at about $42 billion — IBDs are positioning themselves to help their advisers capture a piece of those assets as they deal with a new generation of investors that is demographically diverse and technologically savvy.

“As their parents get older, the millennials will become more participatory in helping with their [parents'] wealth,” said Wayne Bloom, chief executive of Commonwealth Financial Network. “You have to speak to your core clients, but also to their children in a manner in which they are comfortable, using technology — social media, email, chat, video — to make sure they understand you’re doing a good job for their parents.”

Many financial advisers meet with the children of their clients as a free service. But a Spectrem Group study released last year shows that just 29% of clients with assets of $25 million or more said their children or grandchildren have established a relationship with their adviser. And 44% said they think it’s important for their children or grandchildren to meet with their adviser.

“I think there needs to be some sort of an alignment between the adviser, the primary client and their children,” said Larry Roth, CEO of Cetera Financial Group, a subsidiary of RCS Capital. “We all know from communicating with our kids. We used to actually call them on the phone, then email … and then they jumped to texts.”

“I think a lot of the younger generation [trust] their iPhones more than they trust the financial community — and with good reason,” Mr. Bloom said. “What are the headlines they’ve been exposed to? A lot of bad actors, firms that haven’t done the right thing, the mortgage crisis.”

Whether those young investors will end up with an adviser is complicated by the emergence of robo-advisers, an asset-management model in its infancy.

“Today’s robo-advisers, to me, are so laughable because they really don’t do anything,” Mr. Roth said. “The financial advisers we all work with are members of their community; they know their clients, they know their families … They have a sense about what [clients] hope to do with the next five, 10, 20 years of their lives. I think the practice of the future will have all the technology that Schwab or Fidelity or any of the coolest robo-advisers might have, but it’s the human being that makes all the difference.”

Robo-advisers manage about $19 billion, according to research firm Corporate Insight. That represents only a sliver of the financial advice market, which as of 2013 stood at $36.8 trillion, according to Cerulli Associates.

For the entire article from InvestmentNews, click here

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