You’re 27. You’ve made a substantial amount of money. And now you’re unsure of how to make the most of it. You know you should do something sensible with it, but what?
Would you seek out a financial adviser or planner? You’ve heard your parents talk about theirs, but don’t they mostly specialise in retirement and pensions?
Undeniably, financial advice is traditionally associated with older demographics. Or those who are ultra wealthy. Unless you’re lucky enough to receive an inheritance, you might never think of seeing a financial planner until your 50s.
This means that for many people in their 20s working with a financial planner may never be on their radar. But what about other Millennials? What about the ones that are lucky enough to be classified as financially successful? What are their thoughts on financial planning?
There are benefits to seeing a planner at this stage of life, vs the other options. We know that, but understandably young people may not. And yet there’s a huge ‘advice gap’ which means that millions of young people aren’t getting the advice they need to help them prepare for their financial futures.
We’re interested in addressing this, but our 20s are long behind us! So to understand more about how the younger generation currently approach the idea of financial planning, we spoke to 27-year-old David, by asking him a range of questions about our industry. Some of his answers were expected and some were surprising. Here’s how it went.
Question 1: What do you know about what a financial planner actually does?
David: I think they provide bespoke financial advice on various financial products such as stocks and shares investments, savings accounts and other types of investments.
Question 2: If you’re going to pay for advice, where would you think of going to first?
David: I would normally consider going with a well established company such as a bank or a consultancy firm. The problem with these institutions is that they normally offer a very generic service and try to sell their own financial products.
Also, some of these banks often have quite high thresholds for offering financial advice to individuals (i.e. you must have X amount of assets). Young people often have high earning potential but a small amount of assets. It would be good to see a service that helps these people. Therefore a smaller firm with someone with a proven track record offering a bespoke service would potentially be more attractive.
Question 3: If you were to pay someone to advise you in the long-term, what would you be looking for? What would provide added value?
David: If I were to pay someone I would like a personalised service. This would include advice on property, funds, stocks and shares, ISAs, premium bonds, emergency funds and a strategy for growth depending on someone’s personal circumstances.
For example, someone who is London-based and happy to settle there will have a different plan from someone who hopes to have an international career that involves changing country every few years.
Also, being able to access important financial information through an app on my smartphone would be useful. If I can do this by myself on an investing app, why can’t I do the same with my financial adviser?
So what did we find out?
Younger people want a personalised service
This is a really insightful comment. Personalisation is important to everyone because we’re all used to receiving it - think about how we’re shown Amazon books that other people like us have ordered, and how we now get our names on Starbucks coffee cups - but for older people this is a relatively new phenomenon. For younger people it’s always been there - largely thanks to the internet, so naturally their expectations are high.
However, the financial services industry is still catching up in this area and understandably the perception is that this kind of personalisation is going to be hard to find.
Of course Barnaby Cecil is only about personalised financial planning. When I sit down with clients, I learn about their aspirations, their interests and their current financial situation. Based on what I’ve gathered, I’ll create a plan that details what opportunities lie ahead of them. From start to finish, everything is created to suit their needs.
David’s answer has certainly given me plenty food for thought. If there was some way of communicating the personalised nature of financial planning, perhaps it could shape the perceptions millennials have of the industry.
Millennials expect financial planners to utilise technology
This feedback was something that we’ve been anticipating for a while - to become more tech enables. Almost every industry has modernised to the digital era by integrating technology to make life easier for clients. Unfortunately, the same can’t always be said for financial planners.
But David is 100% right. We’re all used to getting important tasks done at the click of a button. If you can effortlessly check for updates on your investments, why can’t you do the same with the investments made with your financial planner?
Undeniably, the traditional method is cumbersome and inflexible, making financial planning unattractive to millennials. I believe this has only encouraged younger people to learn about investments themselves through popular apps such as eToro and Trading 212. Needless to say, having the long-term benefits of having a professional by your side outweighs the pros of self-learning how to invest on an app.
But yes, we understand the absolute necessity to modernise. In fact, so much so that we’ve created our very own Barnaby Cecil app. Through this app you can:
David’s feedback was fantastic. His thoughts on financial planning re-iterated a lot of preconceived beliefs of what we thought millennials had of our industry. And unfortunately, it seems that the financial planning as a whole still has more work to do to connect with younger people.
Arguably, the biggest obstacle is the financial one. Not many millennials will be in a position of hiring an expert to oversee their finances. But being only 27 and somebody who can be viewed as being financially successful for his age, David wasn’t aware of the personalised nature of financial planning.
He did also leave us something to think about - the importance of integrating technology into our services. David’s comments have re-emphasised our need to keep testing new digital solutions to create a better financial service for our clients. Watch this space for more developments.