Iona Bain has been travelling around Britain finding out what young people are doing to get help with their finances. She has documented her findings in a great FT article
Shunned by traditional advisers, younger investors use apps and digital platforms
Her travels take her to the usual suspects – Nutmeg, Multiply and MoneyBox though – like any grand tour – there are sites that are missed – MoneyHub, E-vestor and PensionBee (for three). The article is not supposed to be a directory.
I have a few complimentary copies of the article I can share to those who do not subscribe to the FT – mail firstname.lastname@example.org if you want one.
The A-word and how it’s been
Advice has become a commodity and an expensive one. It’s the caviar to the cod’s roe of guidance, it’s so precious that it is only given to those who can pay for it, through a clip on their wealth. Advice is what millenials want and can’t get – because they aren’t (yet) wealthy.
If you are wanting to pay for a financial adviser, and plenty of us should, then follow the advice in this blog by Paul Lewis. But remember, the fact that you clicked the link makes you a rare (and probably privileged) breed.
At times Iona’s article hints that IFAs are being short-sighted, not focussing on a cradle to grave advisory service. But it concludes that IFAs can afford to wait till the wealth has cascaded before engaging with the young. Advice is a minority sport – like fox-hunting – there will always be demand from the entitled.
But if it’s true, (as suggested by recent research from Drewberry) , that only 6% of people want to pay for advice from a clip on their liquid assets, why does the Ad Valorem model (which collects advisory fees as a clip on liquid assets, prove so popular?
Iona Bain’s article cleverly avoids answering these questions. Instead she feeds back using twitter, the responses to the article.
The comments on my latest piece for FT Money are fascinating. Strong belief coming through that young people don’t need professional financial advice & could save themselves a fortune in fees over the long term by reading up & getting informed 🤔🧐 https://t.co/to34lGs8z8
— Iona Bain (@ionayoungmoney) March 15, 2019
The harsh conclusion is not that people don’t just want an end to valorem charging, they want an end to advisory-charging. That is a much greater issue for regulators, than protecting the livelihoods of IFAs – who are proving more than capable of looking after themselves.
The Burn-Out generation
My son – who is a generation younger than Iona, seldom answers my inane senior questions verbally.
He sends me a link to the answer on one of around ten messaging systems he employs (and I slavishly sign up to). These include Slack, Whatsapp, Facebook Messenger, Twitter DM as well as and SMS. He has reluctantly signed into LinkedIn (the old folks home) and even messages me on that. E-mail is a work app, but only one of many
The answer to just about everything is downloadable and app management is now essential to avoid “errand paralysis” .
In a great article on Buzzfeed (linked above),Anne Petersen points out that Iona’s is the “burn-out generation” where existence is reduced to “to do”lists organised digitally but never quite completed.
Reading the article – I realised that what has changed is dependency, young people are now dependent on the ready availability of answers to questions from the web.
What they are not getting is ready answers to their financial questions, and especially their questions about pensions. Ask social media what to do with your financial problem and you get referred to a financial adviser.
I heard the same frustration from another Millennial – Lottie Meggitt – at a recent pensions event. She more or less accused my generation of not handing down to hers the keys to the secrets we hide in our black boxes.
This ever-present fear that millennials have of not being able to manage for themselves is exacerbated by a financial advisory industry that refuses to play ball. Lottie and Iona’s frustration is not just with the complexity, but with their inability to cut through it. We are in danger of burning-out their patience.
I get this – though I am not sure I am the answer
Actually that’s not true, I am quite sure that I can be part of the answer, though I need Iona and Lottie and Olly to deliver it.
The best that my generation can do is to pass down answers to their questions which they can deliver intelligibly to those around them.
Attempts by baby-boomers to deliver solutions to millenials are doomed to failure. We can only follow.
The first thing we must learn is that the vast majority of financial advice should be and remain free. The calamity of putting advice behind a firewall and charging for it is that we have alienated more than 9 in 10 people for asking for it.
“I can’t give you advice” is one of the great lies. Anyone can give advice, the question is whether it is worth listening to, not worth paying for. What financial advisers have done is created a means to monetise advice which I and my generation whole-heartedly endorse. We are in fact trying to make ourselves relevant, but we are lying when we do so.
“I can give you advice, but I don’t have time”, would be a more honest answer.
“I can give you advice – follow this link” is the answer my son gives me.
Will the market find an answer?
Financial services has been slow to answer the need people have to get their questions answered digitally. It’s just not created the way to deliver the answers which are out there.
But the answers to our questions can be found , if only we know how to frame those questions and have confidence in the search process itself.
The encouragement for the market is that the opportunity is out there. The investment of time and energy in delivering the digital advisory services needed requires patient capital and a confidence among investors and entrepreneurs that where trust is gained, reward will follow.
The question is not how but when. I suspect the answer to this question lies with the Regulators. I have the opportunity to speak in a few weeks with the Chair of the FCA and I will be putting this issue at the top of my agenda.
I think it is critical that Government moves with the times and understands the issues raised in Iona’s article. We need to allow people to get straight answers to their questions without the complications of products and product related fees.
We need advice to become free again and for its delivery to be trusted. Pensions Experts should not be afraid of the A-word but aspire to be trusted advisers (if only through the digital delivery mechanisms created by younger generations).
The answer to the questions raised by the Financial Advice Market Review and by the Retirement Outcomes consultations will not be found in the past but in the present. The questions are being asked by the millenials – which is why Iona’s article is so valuable.