Hope Coumbe
Hope Coumbe shares a view on why Millennials are actually cutting corners when it comes to financial planning…
Which generation has had it worst when it comes to costs? Is it the Baby Boomers who had to literally and figuratively build back from one of the nation's most economically unstable periods? Is it the Generation X lot who have been unceremoniously dumped down the gap between old and new financial policy? Is it Generation Y – the selfish, easily-hurt, ever-complaining, avocado-eating monsters who want everyone older than them to give up their big houses?
I jest, of course, I am myself a member of Generation Y. Also badged as ‘Millennials', the above description is, however, one often given to us by other generations. Even Generation Z – the youngest adults in the workforce – aren't on our side and have their own hurdles to content with.
We have all heard the argument time and time again across age groups. Growing up, accumulating wealth, getting on the property ladder… its hard. It's hard for almost everyone, unless things align nicely, for want of a better word of course, with inheritance. There's no point bringing context into these discussions – you can never get away from every generation feeling like they had it tough. Even without the context which clearly shows some objectively had it worse than others on paper, it feels the same for everyone. But… is that the same for how we think about advice?
There's lots of talk in the industry about intergenerational wealth planning and wealth transfer. Rightly so, too. Your firms are dependent on clients, so you need to be thinking about what happens when those clients are no longer with you. Where will their money be? Will you be managing it? How can you keep it within your business?
On the other side, we're hearing more and more about how it can be very difficult to engage the young despite how important many of you appreciate it is. At the Professional Adviser Management Retreat last week, one adviser shared their concerns about how many potential young clients they are losing to influencers who speak about personal finance – ‘finfluencers'. This adviser seemed convinced that Millennials are actively choosing the ‘services' and ‘advice' given by finfluencers over what is offered by qualified advisers.
Let's not kid ourselves... are there really advisers out there who feel like young people actively want to engage with a finfluencer over an adviser? Young people are many things, but I am sure they all understand the importance of being a trained professional. Would they want a college or University lecturer who wasn't qualified? A dentist without the correct training? Likely not. Millennials know – like Generation X and Baby Boomers knew between ages 28 and 43 – that there are corners you can cut, and corners you can't.
Corners you can cut include trying to fix a blocked sink yourself, or resting a sprained ankle at home rather than visiting a physiotherapist. ‘Hang on…financial planning isn't a corner you can cut!' I hear you say. Believe me, I agree. While there is plenty someone can do to help themselves when it comes to personal finance, I strongly believe there are few people who can genuinely do a better job in the long run without an adviser. Where is this all going then… why is financial planning an area that planners believe Millennials have badged as a corner to cut?
I would wager strongly that it's not because they don't value your work. The cost, of course, is at the heart of what seeks many to engage online with finfluencers. It's free to do that. You take it with a grain of salt though. Anyone who is young and has grown up in the digital age understands you take everything online with a grain of salt. It's part and parcel of having always been in that world.
Cost as a barrier doesn't mean that financial advice isn't worth it. Of course it is. I'm not sure there are Millennials that would disagree with that. However, there are limited ways Millennials can make their finances stretch at the moment and that's purely a stage-of-life thing. Somewhere in that, financial planning is not making the cut. So what is the problem? I think it's communications. There is a gap to be filled. A knowledge gap or an understanding gap which means financial planning is currently in the ‘corner cutting' camp. I highly doubt it's because Millennials genuinely think they are getting a better service from finfluencers or managing things just fine on their own.
Like people of all ages, Millennials will pay for where they see value. They will wiggle the budget around and find room. The true question at play here is simply why financial planning is not viewed that way. I don't have the answer and I'm sure there is more than one. It's a nuanced issue, so let's think about it as such, and with empathy. These people are, ultimately, the only choice of client in the long run.
