The financial advice profession could do a lot more to attract younger people, which is vital for bringing the next generation into the advice arena, according to John White, the new president of the Personal Finance Society.
Mr White says: “Who wants to talk to a grey-haired old man like me? My kids don’t, so why should anyone else want to?
“They could probably relate far more to someone in their late 20s who has done their qualifications and can relate far better to the needs and wants of their generation.
“We talk about the average age [of advisers] being in their 50s, and it’s still in their 50s; it’s really important.”
Getting the savings habit
The reason for this, says Mr White – whose day job is chief executive of Sanlam UK – is that the earlier people get into the savings habit, the better, as then they stand a much better chance of a well-funded retirement and a financially solvent life.
He says: “I think it’s got to be front of mind for every generation. The younger you are, the easier it is. When it gets to later years it gets harder to accumulate the money.”
However, dedicating an advice business solely to the younger generation is not the solution.
“If you give advice to those in their 20s, how do you run a financial advice business that can be commercially viable, if it only serves those younger people? These clients don’t have the wealth to justify the advice costs,” Mr White says.
“But it’s important that the younger generation is financially solvent.”
One solution is to involve the children of clients in the advice process. The other is reaching out to them through the workplace. He says: “I tend to think we are missing a trick through employers in how financial education is provided.
"I don’t think it’s the case that they can do it exclusively, and there’s an important opportunity for financial advisory businesses to support employers to provide that basic advice.”
However, it is important that this process is handled properly. Mr White says: “People shouldn’t see it as just another tax. Now pensions under auto-enrolment is just seen as another tax in a negative way by people.
“More people in their 20s and 30s want to take advantage of buying their bike tax-free than are interested in accumulating [in a pension plan]. We have to change that message to get them excited about the future.”
He adds: “I think the argument of why people need more advice at the lower earnings level is because pension schemes are not providing in the way they used to in the past. We don’t have defined benefit pension schemes or group personal pensions in the way we did; it just creates a different mentality.”