Debt-ridden millennials are the ideal candidates for financial advice, according to a fintech expert.
Matthew Schulte, head of financial planning at eMoney Advisor, insisted young people with loans must seek financial advice now, and not wait once they have finally accumulated wealth.
He said: “Although most young people have not accumulated wealth just yet, many have very complicated financial pictures due to the amount of debt they may be carrying, whether it stems from student loans, credit cards, or car loans.
"Before they can accumulate wealth, they need to know how they should spend their money. This makes them perfect candidates for financial advice."
EMoney Advisor describes itself as a service to "transform the way financial professionals deliver advice at scale and build collaborative relationships with their clients".
The firm said it uses technology to help advisers offer more "competitive" services. Traditionally the cost of financial advice has put it out of reach for many younger people, who are also less likely to have the level of assets to make them attractive to financial advisers.
But Mr Schulte said advisers need to adapt the services they offer to entice younger people before they have wealth.
“An adviser who provides planning-led advice can first educate them and then help them get on the right track to meeting short and long-term financial goals.
"Younger clients can focus on simpler goals like creating a budget or maintaining an emergency fund, while working with their adviser on strategies to maximise their ability to save.
"Most importantly though, the earlier you start good savings habits, the more time you have to build a nest egg that can help you fund your future financial goals.”
Speaking exclusively with FTAdviser, he said having an accurate understanding of how markets have performed in the past combined with an understanding of one’s own time frame for retirement might encourage young people to take on more risk in their portfolios.
He added: “The guidance of an adviser may provide some peace of mind as well. It is always easier to make financial decisions when you realise you are not alone and working with an adviser who has your best interests in mind.”
Mr Schulte said the use of scalable financial planning software and other digital tools that automate tasks and streamline business operations - like the ones his firm offers - mean advisers can create more financial plans and serve more clients than they have traditionally.
That is why he believes technology is one of the most important things in making advice more accessible.
He said: “Millennials rely on technology for all aspects of their lives, so they should for planning too. They need to ensure that their adviser offers real-time access to their financial picture through a client portal.
“Younger clients, more than ever, want to work with an adviser on their terms. Often this means utilising web-conferencing or other software that promotes virtual meetings regardless of the level of interaction between adviser and client.”
However, beyond that, Mr Schulte said making advice more accessible starts with flexibility on the adviser’s part.
He added: “Today’s best advisers can work across devices, adapt their business and pricing models, and provide a range of services, ultimately making advice more accessible to younger and more diverse demographics.”
He also welcomed the increased use of robo-adviser for millennials, if they are looking for a low-cost asset management. He added robo-advice’s easy to use and engaging mobile experience has enabled a wide swath of the population to have access to diversified investment portfolios at an affordable price.
But, he added that if millennials want answers to specific financial questions and the creation of a financial plan to meet their goals, then they are better off meeting with a human financial adviser.
The rise in different forms of advice also means millennials must remain vigilant to scams and shady financial planners.
He advised people to "never pay for anything up front".
"Before a planner can be compensated, they must establish the ground rules of the financial planner engagement, which should include areas they are responsible for and, more importantly, areas they are not.
"Any adviser requiring payment at of the very first meeting probably doesn’t have their clients’ interests at heart.”
However, Samuel Blanning, financial adviser at Bristol-based Star House Financial Services, disagreed with the idea that debt-ridden millennials should pay for financial advice.
He said: "The reason IFAs don’t formally advise people with negative net assets is because every pound they spend on advice is a pound they can’t spend repaying their debt.
"Millennials with debt certainly should seek guidance about their financial situation, and this is available for free from numerous online and offline sources such as MoneySavingExpert, Citizens Advice and StepChange. But paying money to an IFA is highly unlikely to be worthwhile for either party."
