Alternative Investment

Younger Investors Want Advisors With Good Mobile Apps, J.D. Power Says

The digital landscape is evolving and if financial advisors want to attract more younger investors their mobile apps need to be as effective and comprehensive as their website, according to a new study published by Troy, Mich.-based J.D. Power.

The organization released its 2022 U.S. Wealth Management Digital Experience Study last month, which looked at the digital presence of 15 major financial services firms through the lens of the consumer. The study examined how effective these firms are with their digital elements.

There was a significant focus on mobile apps over websites, the study found. Participants ranked a firm’s app and website on an average satisfaction score of 1,000 points. In general, mobile apps earned 731 points, which is 50 points better than the websites, which scored 681, according to the study.

“The digital experience and the mobile app experience is an important opportunity for brands to differentiate themselves completely,” said Michael Foy, senior director of wealth intelligence at J.D. Power.

While websites continue to be an integral part of an advisor’s business, mobile apps are quickly becoming a faster and more convenient alternative, particularly when it comes to millennials and members of Generation Y, Foy explained.

“They are looking and expecting features that mimic those that they find on the website,” he said. “The challenge is how do you re-create those features on a small screen.”

Investors want the ability to research investment options, use a planning tool, and consume educational content on an app just as easily as they can on a website, according to Foy. 

A variety of investors are using apps. They are not solely used by those looking to avoid working with a rep, the study said.

“We see the app experience is important for self-directed investors but also for those who are working with advisors and play a less active role in their investments,” Foy said.

Websites still maintain their place with investors, although the younger generations tend to gravitate more toward the mobile apps and using them frequently, the study found. However, firms should not be placing all of their resources into just one digital platform.

“We still see more people using the websites than the apps,” Foy said. “It’s not a channel that anybody should ignore.”

The study itself did not specifically highlight younger investors, as the more than 6,300 participants ranged in age from pre-baby boomers to millennials, Foy said. They were all customers of 15 major wealth brands along with a few small independent institutions. 

They were asked to evaluate the apps and websites they frequened using the 1,000-point scale based on their visual presentation, their ease of navigation, speed, and the quality of the information and content found. The study was conducted last summer, Foy said.

Members of Generation Y gave apps an average score of 760 while those of Generation Z scored them with a 720. The balance of the participants, which included members of Generation X, boomers and pre-boomers, did not rank the apps as high as they preferred websites.

The firms whose apps ranked the highest in the survey included J.P. Morgan Wealth Management, which had the highest ranking at 728, Charles Schwab with 726, and Edward Jones with 710. Interestingly, while financial services firms are looking to differentiate themselves from each other in making investment decisions, in terms of their apps, their competition aren’t necessarily those in the industry.

“We see the experiences investors have on their mobile app to be informed by the experiences they have on non-financial apps [such as Amazon] as well,” Foy said. 

Despite the frequent use of mobile apps, Foy said there is significant opportunity financial advisors are missing. Many see apps as a threat to their business and therefore are not talking with their clients about them. Foy said this is a mistake and advisors need to see apps as a complement to their business not a competitor.

“Don’t think of mobile apps as something that is competing with your client’s mind space,” Foy said. “They can [help keep your clients informed].”

Finally, advisors are not using the apps to their full potential when it comes to communicating with their clients. Many apps offer options to schedule meetings with clients or speak directly to them. Apps can also help advisors looking to be more efficient with their time.

“It’s a productivity win,” Foy said. “There are things that the client can go to the app to have answered which will free up your team to address other clients.” 

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