A new look financial adviser for a new generation?

The panel have already agreed financial education needs to be stronger and further implemented among young people. However, with the latest figures still showing
a significant advice gap in the UK, does the profession need to do more to encourage young people to take on regulated financial advice?

Opinions were forthright as our panel discussed the potential need for a ‘rebrand’ of financial advice. A lot of this stems from the fact that, for some people, the role of a financial adviser is not particularly clear in the first place.

‘A lot of people still think we’re investment managers or asset managers,’ reflected Nathan Mead-Wellings, director and senior financial adviser at Finura. ‘How many clients at a first meeting claim to be disappointed with the performance where they are?

‘The first thing I say is that’s the one thing we can’t control. That’s one thing we can’t do. I then give them a list of all the positive things that we can influence. We put a big emphasis on behavioural finance and behavioural science.’

This extension of the financial education argument is crucial as Chris Daems, managing director of Cervello Financial Planning, argued a lot of clients can come into financial advice with harmful misconceptions.

‘A phrase I’ve used with clients a few times is: “I’m not a magician, I’m a financial planner”,’ added Daems. ‘I’m not here to deliver some sort of magical return that you never need to worry about again and actually, there’s no homework or proactivity needed from your side.

‘This is a partnership and I can bring the financial planning chops to the table. You need to bring the attitude, the behaviours and then the action on that financial plan for things to pan out (and the money).’

The notion of a ‘partnership’ between the adviser and client is a sign of modern financial planning, which signals a move away from simply selling products and towards conversations and understanding someone’s financial and lifestyle ambitions.

However, the panel think misconceptions still linger and the sector needs to do more to get through to younger generations. The profession is still set up to talk
to older generations of clients, something Phil Patient, group chief operating officer and private client wealth specialist at HFMC Wealth, said is acting as a barrier to younger people engaging with advice.

‘In terms of the rebrand point, if you expect a 20-year-old to walk into a wood-panelled office and engage as if we’re all about you, you’ve got something wrong right at the start,’ said Patient. ‘So, you’ve got to talk to people as people, about things they’re interested in and I think we have to make ourselves far more accessible.’

A MUTUAL MISUNDERSTANDING

Our panel discussed the subject of young people engaging with financial advice at length and it quickly became apparent misconceptions went both ways. This new generation may not understand the role of a financial adviser. But on the flip side, is the profession adopting a catch-all approach when it comes to young people?

A common theme among upand- coming generations is that, through a combination of inflation, higher retirement age and poor wage growth, young people face
a starkly different financial future than previous generations. Though the extent of this is debatable, it has nonetheless influenced attitudes towards money among young people.

‘At the moment for someone my age, I’m not going to be getting state pension until age 68, however it’s looking like it’s going to probably be even age 70,’ said Jessica McGuigan, financial planner at Critchleys. ‘So, with that view, I think people are put off saving when they have this idea in their head that they’re not going to be able to achieve the goals or aspirations everyone else, who is older, has managed to achieve.’

This issue of affordability is one of the reasons many blame for young people not taking up financial advice. However, the process of financial planning can begin from humble beginnings and Amyr Rocha-Lima, chartered financial planner at Holland Hahn & Wills, pointed out compounding of small amounts of money can be a crucial breakthrough. ‘In a previous life I used to be the guy that implemented corporate pension schemes for employers in and around London,’ explained Rocha-Lima whose job was to talk millennials through saving for retirement.

‘They would be forced by the HR officer effectively to go and watch a presentation about this new pension scheme they were being automatically enrolled into and you should have seen their faces when they were walking into that room. But suffice to say, at the end of it they were all engaged.

‘It was a 30-minute presentation with mainly pictures to demonstrate what a pension does for them over the long term. They start realising the £50 a month or £100 a month that’s coming out of their account automatically can build up over time.’

Here, the panel agreed the importance of understanding the issues and attitudes younger savers face when talking with them about financial planning. One big change financial planning is having to adjust to, is new employment patterns, where people move around more in roles, rent for longer and potentially take career breaks. Michael Filgate, regional sales manager at Invesco Asset Management Limited, remarked this was a particularly striking differentiator: ‘If I ever said to my dad I was going to [take a gap year] he would have clipped me around the ear and said: “just get out and work”. I think attitudes have changed. People are going to be living longer so they can afford to do things differently.’ In particular, Kirsty Stone investment manager at Dart Capital, pointed out perceptions of young clients may not be accurate in reality.

‘In your head you picture a 23-year-old inheriting £1 million but, in reality, they could be 60 before they inherit anything,’ said Stone. ‘Your approach to life and finance will have changed significantly by the time you’re 60 as the priority for younger people is experiences, it’s travelling the world.

‘The clients that I’m seeing inheriting money are in their 50s or 60s and even later actually. For them it’s topping up their retirement pot.’

LIFESTYLE PLANNING OVER FINANCIAL PLANNING

As a profession, financial planning has already undergone significant change in recent years. To speak to a new generation of clients, the panel discussed the importance of correctly articulating this new-look financial advice.

‘For us, it starts with the hopes, dreams and aspirations of a client and then we aim to develop a financial plan that meets or matches their money to the lifestyle they plan on achieving,’ explained Rocha-Lima.

‘It’s in that lifestyle part of the conversation that the client opens up to us. We can be mindful of that before we start actually building the financial plan and matching
the numbers to those dreams.’

This new emphasis on lifestyle planning means education for both parties, added Daems, who reflected that clients’ typical lives are what have experienced the most change: ‘What’s interesting, though, is how aspirations change between parents and kids.

‘The kids that we’ve had involved in that conversation have said to their parents: “just spend it”. As you say, enjoy your money, it’s interesting.’