In the words of Steve Jobs, it’s time to “think different.” About technology, about your clients, and about your business.
There’s a lot of change going on in the investment world, and roboadvisors and new DOL regulations are just the tip of the iceberg. Perhaps the biggest shift facing advisors today is the emergence of crowdfunding as a major investing opportunity for younger investors. Whether you know a lot or a little about crowdfunding, now is the time to up your game.
The crowdfunding movement was born out of the Great Recession. In an effort to generate new growth, President Obama signed the Jumpstart Our Business Startups Act (JOBS Act) in 2012, and it revolutionized capital raising for startups. It also revolutionized investing for individuals.
Crowdfunding is currently forecast to account for more funding in 2016 than all of venture capital combined.
That’s a game changer. For advisors, crowdfunding is poised to have a huge impact on your business model—and your revenue—unless you take time now to learn about it and turn it into an advantage before it becomes a threat. If you’re not convinced crowdfunding is coming your way, consider the following:
What does the recent uptick in crowdfunding platforms and successes have to do with your advisory business? A lot.
Especially if you are hoping to attract and work with Millennials to grow your practice.
According to a 2015 survey by Capital One ShareBuilder , 93% of Millennials stated they were wary of the public markets. They lack trust in the markets and they lack knowledge when it comes to investing in stocks. It’s no wonder Millennials lack trust in the markets -- they watched their parents suffer through the stock market crashes of 1987, 2001, and 2008, and it wasn’t pretty.
Financial literacy is also a problem. But, as with most challenges faced by this demographic, their response is to turn to technology as a safe haven. Keep in mind that Millennials are on deck to inherit an estimated $30 TRILLION, and they’ll be tomorrow’s biggest earners as well. Combine their love of technology, their lack of trust in the markets in general, and their need to invest, and crowdfunding is sure to play a significant role in their financial futures.
As an advisor, your goal is to attract as much of those assets into your practice as possible, and that requires helping Millennials reach their goals on their own terms . How can you add value when Millennials are able to access so much online and, as the crowdfunding websites promote, cut out the middleman? (Hint: That middleman is often you .)
Begin by making it your mission to stay informed about what’s happening in the crowdfunding space. Spend just 30 minutes each week on sites like Crowdfund Insider and the crowdfunding due diligence site Crowdd . Check out the top crowdfunding blogs like Ayudos , Early Investing , and the Crowdability blog .
Perhaps most importantly, have conversations with Millennials about how and where they plan to invest. Then share what you’ve learned and keep your ears open for new information. The more you know, the more value you can add. And that is precisely how every advisor earns the trust—and the business—of the clients of tomorrow.