Greater personalisation and a simplified advice model could help to improve younger generations’ engagement with financial advice, a new report from PIMFA has found.
The ‘Under 40 Leadership Committee’ report, which surveyed 500 people across the UK, revealed diverging attitudes across generations to finance and financial advice. Nearly half (49%) of Generation X and 63% of Baby Boomers never talk about their finances with friends. In contrast, over 80% of millennials and Generation Z said they discuss finances at least annually and 70% speak with a financial professional. The report also found sustained support for more personalisation and a simplified advice offering, both of which are currently being explored by the Financial Conduct Authority.
In a nod to the growing prevalence of social media, three quarters (75%) of those under the age of 45 have either already bought a financial product or would consider doing so on the advice of a social media financial influencer, the trade association said. More than two thirds (67%) of those aged 18-34 said they had viewed financial posts from social media personalities and 43% of 35 to 54 year olds said the same.
The report, which focuses on some of the major issues that will face the advice and wealth management industry in the coming years, also showed women feel less confident when it comes to making investment decisions and require support from advisers to help them feel comfortable.
The majority (55%) of women who have already made some investments admitted feeling either intimidated by investments, that financial advice was not aimed at them or they wouldn’t know what value they would get from it. A slightly lower (45%) percentage of women who have never invested expressed the same sentiment.
PIMFA said the way products are promoted and discussed also poses a barrier to taking advice, with a fifth (21%) of female investors and 17% of female non-investors saying they felt intimidated by the investment world.
The research also looked at the issue of inheritance, with 52% of those who earn over £100,000 per year expecting to receive an inheritance, having discussed Powers of Attorney or later life care with the generation above, compared to only 22% of those earning less than £30,000 per year.
Liz Field, chief executive of PIMFA, said: “As in previous years, the Under 40 Leadership Committee report has sought to address hot topics facing our industry that the leadership committee and wider firms are likely to be dealing with in the coming years and outlining how the industry, government and regulators can work together to ensure a better future.”
Field said the results were both “interesting and noteworthy,” with some particular findings “striking an alarming note” and highlighting the urgency around some of the concerns held by PIMFA.
Field added: “There are some very sensible recommendations for the industry, government and regulators to take note of and I truly hope the report starts a number of discussions about how we can ensure that we serve the public and help them achieve their financial goals.”
