Millennials and the changing face of financial advice

In this article, Tom Conner, Director at Drewberry Financial Planners, discusses the advice need for millennials and how remote based advice could be a solution.

Currently millennials are significantly under serviced by the financial planning / advice industry, in that very few advisers are looking to take on millennial clients.

They are generally unserved because the most common charging models are based on a percentage of assets under management, assets that they typically haven’t amassed yet. Given this, most advisers aren’t interested in taking on millennials as clients as they can’t see a way to make it pay.

However, there is change in the wind. Over the last five years profitable (subscription based) models have developed in the US and UK that do work, they’re just not yet widespread. Adam Carolan is a leading light in this area in the UK and has co-founded NexGen Planners to help aspiring planners develop their trade in a modern, forward thinking way.

Millennials and the need for advice

Some argue that millennials don’t have a need for financial planning as they haven’t amassed any assets to advise on yet, but that couldn’t be further from the truth. It could be argued that millennials have even more of a need for planning as they transition into marriage, homeownership, parenthood and from being cash strapped to having disposable income to put away for the future.

There’s lots that could be discussed around what the ideal financial planning proposition for millennials looks like but here I focus on a key question about whether advice needs to be provided face to face.

The traditional argument is that it’s not possible to build enough trust without seeing a client face to face, with it often being cited that clients ‘need to see the whites of your eyes’ before they will trust you with their money. Another common argument is that it’s too hard to engage with clients on an emotive level if you don’t see them face to face, which is vital to really understand a client’s drivers and ultimate goals.

The is probably an element of truth to these arguments. Drewberry’s 2016 Wealth Protection Survey of 2,000 workers, found that over 80% of respondents preferred to receive financial advice face to face. However, when you break out the figures by age, younger cohorts were more receptive to advice being provided over the telephone or via video call.

Source: Drewberry Wealth & Protection Survey, 2016

Ultimately, most millennials have never received financial advice and therefore don’t have pre-conceptions about how advice is delivered. This provides an opportunity to shape a remote, technology enabled proposition for millennials. When done right, I don’t see any reason why this wouldn’t appeal to a large chunk of the millennial population.

Technology enabled remote relationships

Millennials are far more used to communicating via technology. As a millennial myself, I can just about remember what life was like before the mobile phone was mainstream. How times have changed. Most millennials have grown up with the expansion of technology enabled communication. In the past it took a pen to have a pen pal, but now that pen pal is a WhatsApp or Facetime pal. We’re used to communication this way and an advice business could become more approachable and personal using these technologies.

My personal view is that building trust or empathy isn’t the main barrier to providing remote advice (after all, you can still see the whites of someone’s eyes over a video call), it’s the ability to use visual cues to help explain complex matters.

At the PFS Power Live conference in June, we heard from Dennis Hall of Yellowtail Financial Planning about how he likes to draw cash flow pictures by hand for new clients to help explain financial planning. Most leading advisers these days are using cash flow software to visually demonstrate ‘what if I did this’ scenarios with clients and I think visual cues are vital to aid client understanding. These days this can be facilitated by screen sharing technology platforms (at Drewberry we use, so this need not be a barrier any longer.

Remote advice being more convenient

Millennials with young children are some of the busiest people you’ll find. Finding the time to go to a financial planner’s office can be difficult. Given this the remote adviser has to have appeal. It delivers financial planning from the comfort of your living room, without having to have a stranger in your house.

Millenniums are also commonly on the move, starting off in city centres and ending up in the countryside. What do they do in this situation, change face to face adviser? The benefit of a remote adviser is clear here: consistency.

There is still much to do to build any kind of mainstream proposition to service millennials, but the development of remote, technology enabled advice propositions could play a big part in doing so.


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