Millennials are failing to engage with traditional financial advice. In 2017, only six percent 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’.
With a smartphone, investment advice is at your fingertips. To get the best funds, online wealth managers such as Money form 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 Free trade all market themselves to millennials. Millennial Money has more on millennials’ investments.
Traditional IFAs losing out
The Financial Conduct Authority (FCA) warns against robot 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 Minimize, 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 personalized and regulated advice. Neon Financial Planning offers financial coaching and a complete financial review for £750.
These options are all categorized as generic guidance; meanwhile, regulated personal recommendations on pensions or investments are generally charged at 0.3 percent of the amount invested.
You may be seeking software for financial advisers to help organize your business; for example, software for financial advisers can be found at Intelliflo.
In 30 years’ time, millennials will inherit approximately £5.5tn from their baby-boomer parents; already, 25 percent 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.