Our latest Retirement Report shows that almost a fifth of young workers have sacrificed their long-term financial plans since the start of lockdown, by reducing or stopping pensions payments.
Volatile markets and an unstable economy mean that many have seen a temporary drop in the value of their savings, while some may also be facing pay cuts or unemployment as furlough comes to an end.
This could not have come at a worse time for many young people (18-34-year-olds), particularly those who were gearing up to buy their first home or considering starting a family.
Millennials have different needs and respond to different ways of working compared to previous generationsThe economic fallout from the global pandemic has made some of life’s toughest financial decisions even tougher and so access to expert advice has never been more valuable.
When the UK went into lockdown, young people recognised that they needed help navigating the complex financial world. Last year three quarters of millennials told us they would like a financial adviser to help them with ‘adulting’ – planning their finances for major life events.
However, this same research also showed us that many advisers are not offering what young people say they are looking for.
Millennials have different needs and respond to different ways of working compared to previous generations, which means the traditional advice model might just not be right for them.
Help to prepare for ‘adulting’
On one hand young people say they need help to plan their financial future, but at the same time tell us they want more than just advice.
Nearly a quarter of millennials (24 per cent) want their adviser to make financial planning more meaningful by giving them scenario exercises for real life situations such as marriage, divorce, and having a family, four times as many as over 35s.
In addition to these more ‘common’ or ‘expected’ events, Covid-19 has highlighted the need to ‘expect the unexpected’ and exposed a painful lack of financial resilience among UK savers.
Currently, just under half of financial advisers offer such targeted, scenario-based services, presenting a huge opportunity to attract more young people through an expanded offering.
Going digital
It’s perhaps no surprise to learn that young people are more likely to engage in advice services that make use of digital platforms.
A fifth (20 per cent) would prefer to receive their annual statements through an automated chatbot, three times the overall average across all age groups, and social media has become the preferred method of contact for one in 10.
This is more important than ever as social distancing forces all businesses to embrace video conferencing and other remote ways of keeping in touch.
Supporting conscious consumerism
With the increasing focus on sustainability, today’s young people want to feel confident that their investments match their other ethical life decisions.
According to government figures, of those interested in sustainable investing, almost 60 per cent are young people, with nine in 10 saying they would be more motivated to invest if they knew their money was making a difference.
This provides an opportunity for financial advisers to connect with younger clients by making the advice they can provide around ESG investing a more visible part of their offer.
Moving forward
I recently spoke to Barry Sime, financial Planner at Fairstone Financial Management Limited, who told me: “For many young people who may be thinking about purchasing their first home or looking at their long-term savings, the need for the right financial advice has never been greater.
“With an increasing cost of living and high economic uncertainty following the pandemic, millennials have significantly less disposable income than previous generations, which they need to make work even harder, making expert guidance crucial.
“These challenges, coupled with young people’s awareness of sustainability issues and love for technology, mean that financial advisers must continuously adapt their offering to make it more attractive for the next generation of savers.”
As the world deals with the economic aftermath of Covid-19, it is important that advisers adapt their services to support those who need financial advice the most.
Advisers communicating with young people in the right way, using the right channels, can unlock new opportunities to help clients navigate some of the important financial decisions they may have put on hold as a result of the pandemic.
In doing so, they will be providing the very best support to the nation’s young savers.
Siobhan Barrow is head of individual distribution at Scottish Widows
