There’s no hiding from the glaringly obvious generation gap, especially when it comes to finances and investments.
While the likes of the Baby Boomers (those born between 1946 and 1965) have typically done better out of the housing market than any subsequent generation, it’s now estimated that one in three UK millennials (those born between 1980 and 1996 in this case) will never own their own home.
But is it all doom and gloom when it comes to the financial prospects for this Generation Y?
Firstly, it’s important to look behind the figures to find out why and learn more about this age group’s spending and saving habits.
According to millennials themselves, paying essential bills, a lack of earnings and repaying debt are the key factors preventing them from saving money regularly, with only 17 per cent of those surveyed by BMO Global Asset Management for its Millennial Money Survey, finding that the purchase of non-essential items prevents them from saving money – contrary to stereotypes.
However, earlier this year it was reported that UK wages were rising at their fastest pace for two and a half years, with regular pay sitting at 2.6 per cent higher than the previous year.
With 73 per cent of millennials working more than 40 hours per week, why are Generation Y finding it so difficult to put aside a percentage of their pay packets?
Is it a simple case of educating Generation Y about positive approaches to saving, and can we help with professional advice?Some say that the millennial generation has adopted a much more frivolous approach to spending than their older counterparts, with over 95 per cent of millennials admitting to impulse shopping and almost one in five impulse shopping every day, according to research by comparison site finder.com as part of its 'Millennial Money' statistics.
The average spend of an online impulse shop sits at £38.33, it reveals.
Is it a simple case of educating Generation Y about positive approaches to saving, and can we help with professional advice?
According to research carried out by the financial advice trade body - The Personal Investment Management and Financial Advice Association (Pimfa) surveyed millennials to find out their attitudes towards wealth management and financial advice - millennials view the financial advice industry as inaccessible and expensive.
Some 78 per cent of those surveyed believed they could only receive advice if they had investible wealth in excess of £50,000, but a significant number wanted advice when they had savings of £10,000.
Contrary to perception, it seems the millennial generation do have their heads screwed on when it comes to their finances. We’re finding that today’s young adults are keen to learn, and many withhold a strong desire to improve their financial knowledge and situations.
Around 21 per cent would like to learn more about saving, 12 per cent about managing debt, 12 per cent about banking and 9 per cent about the purchase and sale of property, BMO's Millennial Money Survey also reports.
Perhaps most interestingly, the most popular topic millennials want more help with or education on is investing, with 25 per cent stating that they’d like to know more.
By instilling a culture of saving, investment and the utilisation of professional advice, we’re in a position to curate and understand the next generation of investors.
Not only are they an interesting and worthwhile client today, they’re the customers of the future. So how exactly do we attract and retain them?
For us financial advisers, I’d suggest taking a step back to really think about how we target those aged 22 to 37.
I particularly enjoy working with families across multiple generations, and I love to engage the older children of my longstanding clients in financial planning.
For example, for clients who are looking at the likes of lifetime giving, which will have a direct financial impact on their dependents, it makes sense to us to ensure the recipients of these funds are well-informed of the opportunities available to them to work towards the best possible outcome.
Flora Maudsley-Barton is managing director of Parsonage Financial Planning
