Where do millennials turn for financial and other advice?
Millennials are failing to engage with traditional financial advice. In 2017, only six per cent of those aged 18-34 took financial advice, while half of all IFAs rebuffed young people with under £50,000 to invest.
This generation arguably needs financial advice like no other due to student debt, a crash in home ownership and high unemployment. Many millennials with jobs are considering pension planning, marriage and children, yet lack the money to employ an IFA; however, new digital services are filling the ‘advice gap’. Alongside financial advice this generation needs to be consulting with Will Writing Cheltenham companies to ensure that they are protecting what they do have for their families and loved ones in the future.
With a smartphone, investment advice is at your fingertips. To get the best funds, online wealth managers such as Moneyfarm and Nutmeg encourage investors to discuss risk and their investment timeline. The convenient Moneybox app, cryptocurrency platforms such as eToro and stock trading apps such as Freetrade all market themselves to millennials. Millennial Money has more on millennials’ investments.
Traditional IFAs losing out
The Financial Conduct Authority (FCA) warns against robo models giving guidance purporting to be advice and using algorithms that choose unsuitable funds. Only an IFA can give you whole-of-market financial advice and they are strictly regulated. Apps such as Finimize, which sends emoji-packed messages making world markets fun, threaten the traditional route to information where you pay a middleman to make sense of finance.
What is the risk?
Are younger investors taking on excessive risk? Interest in crowdfunding is growing, even though it rarely returns money to investors. For millennials who want greater support with financial choices, the Multiply app provides financial advice for free and soon hopes to supply personalised and regulated advice. Neon Financial Planning offers financial coaching and a complete financial review for £750.
These options are all categorised as generic guidance; meanwhile, regulated personal recommendations on pensions or investments are generally charged at 0.3 per cent of the amount invested.
In 30 years’ time, millennials will inherit approximately £5.5tn from their baby-boomer parents; already, 25 per cent of those with inheritances are taking £288,000 away from traditional advisers. Finding new ways to pass on financial wisdom has therefore become key if traditional advisers are to survive.