Three Ways Financial Services Companies Can Help Advisors Win in the Meme-Stock Age

Some people – including the co-founder of Reddit – say that the tsunami of new investors snapping up shares of GameStop, Clover Health and AMC amounts to a “bottom-up revolution.”

Maybe. We certainly agree that the meme-stock movement, the viral stock surge of GameStop, AMC, and others in the first part of 2021, means new and old types of consumers are looking for financial advice in new places.  The pandemic-induced shift to virtual interactions made consumers open to new channels for receiving advice. As we look beyond the pandemic, and advisors need to find ways to establish credibility and win trust.

These digitally-driven customers represent enormous growth possibilities if served in the right way. For companies and advisors, this requires agility in responding to market changes and commitment to cohesive omnichannel experiences, especially when it comes to onboarding clients.

Companies that don’t adapt fast enough or don’t support their financial advisors with the right tools are pushed out of consideration. A recent study of more than 250 financial planners finds that 77% of advisors have lost business because they did not have the right technology to interact with customers. In fact, these advisors reported losing an average of 20% of book value as a result.

Redefining Target Markets

First, it’s time to ditch the negative “Reddit bro” and “FinTok” stereotypes. Yes, there’s plenty of over-the-top gambling going on in social media and some genuinely terrible investing advice. However meme-stock investors aren’t just young kids investing pizza money. In fact, meme-stock investors represented a major slice of America. A Yahoo Finance-Harris Poll found that in January 2021 – the height of the GameStop saga – 28% of American adults had purchased shares of viral stock that month. Nearly half of those people invested more than $250 and almost 17% were more than 45 years old.

But even before that, we saw massive increases in the demand for digital financial advice. The pandemic served as a financial reset for many, and consumers began reaching out to advisors with greater urgency. One study found that 67% of people said the pandemic had been a wake-up call for them to examine their finances.

“A recent study of more than 250 financial planners finds that 77% of advisors have lost business because they did not have the right technology to interact with customers.”

Another study from  Nationwide Financial, which surveyed more than 2,000 people, found that by the first week in April of 2020, 24% said the pandemic had ­caused them to contact a financial adviser for the first time. It also reported that 80% of respondents felt they had lost control of their ability to manage their investments and finances.

Fast forward eight months to the GameStop frenzy. “How to invest in stocks” surged in Google search rankings, proving how quickly people moved from feeling helpless to digital derring-do. These people, who are adults, want answers, with 73% of viral-stock investors saying they have researched the U.S. financial system and 20% consulting a financial advisor before buying.

“Since then, some advisors and firms proactively publish content with a clear point-of-view on how to navigate meme-stock fluctuations. They adjust their content strategy to anticipate the flood of customer questions and to educate and prevent hasty decisions.

The best of both fintech and legacy companies are stepping up their tech investments. They understand the elevated consumer demands for frequency and channel of advisor interactions. Facet Wealth, for instance, makes its sign-up process straightforward. Once a prospect becomes a client, the dashboard makes it easy for them to engage with their finances from one place and schedule an appointment with their advisor.

It’s smart since 53% of millennials and 29% of baby boomers say they would switch advisors if they can’t use satisfactory technology.

Three Ways Financial Services Brands Can Gain Relevance in the Meme Stock Era

1. Survey financial advisors to understand what support they need to proactively initiate conversations about topics like viral stock options and to explore different channels by which to interact with customers.
2. Create a market sensing function to respond to market changes. And compile a centralized point-of-view on hot topics, offering a range of responses to support advisors.
3. Incorporate a regular placeholder within the marketing content calendar for market commentary to proactively address market changes and reinforce brand credibility.