Millennials aspire to using an adviser
One of the most interesting things about working on both sides of the Atlantic — around half of Regis Media’s clients are in the US and Canada — is the ability to compare and contrast developments in the financial advice profession in Europe and North America.
Something that constantly surprises me is how much more emphasis US advisers place on attracting younger investors than their counterparts in the UK and Europe more generally.
A major contributing factor, I suspect, is that in the States there are proportionately more advice businesses, as opposed to lifestyle practices, than in Europe. In the UK in particular, there’s a large number of very small advice firms, with just one or two advisers.
But even then, it strikes me as odd that small firms don’t pay more attention to engaging with millennials (or Generation Y if you prefer). After all, people in their 20s and early 30s who express an interest in investing, despite their student debts and their ambition to get on the housing ladder, tend to have a have higher than average salaries. Even if they don’t have much money to put away on a regular basis, today’s affluent young are the high-net-worth investors of tomorrow. It makes no sense for an ambitious advice firm not to engage with them.
New research by Fimimize, a start-up robo-adviser, reinforces just how important it is for firms to pay attention to young investors.
The company surveyed 1,224 British adults aged between the ages of 18 and 34
and found that although only 10% of them currently use a financial adviser. 49% of them currently get advice from their parents but, interestingly, only 30% of them are happy to rely on advice form their parents in the future. Also, only 27% of them would go to their bank for advice.
Also noteworthy is that 80% of millennials feel that they’re not making the most of their savings, and 37% want to improve how they’re saving.
Interviewed by Professional Adviser about the research, Finimize founder Max Rofagha said "As an industry, we really need to start educating young people on the importance of managing their money, using financial advisers and how to do so. In today's uncertain world, it is vital people start planning for their financial future from an early age."
Personal finance expert Jason Butler, meanwhile, said this:
“Many younger people appear to want help and support to make good financial decisions but they want this on their own terms and to reflect their specific lifestyle needs and priorities.
“While an easy to use financial app seem likely to form the foundation of current engagement with a financial services firm, a significant number of millennials expect and would value human delivered advice, as and when their circumstances warrant it.
“The key challenge for advice firms is to become useful and relevant to millennials now, at a price they can afford, and so earn the right to have a more substantial engagement in the future.”
For me, Jason has hit the nail on the head. Millennials will be critical to the success of advice firms for decades to come, and firms need to earn the right to engage with them. If they aren’t producing and sharing regular content now, that young investors want to consume, they’ll only have themselves to blame if they find themselves stuck with an ageing clientele in years to come.