Under-30 IFA: ‘We’re the only age group with negative financial wealth’

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Under-30 IFA: ‘We’re the only age group with negative financial wealth’
Luke Turner, private client director for AHR Private Wealth [Image credit: Carmen Reichman]

Young professionals are in dire need of a basic financial education, with households of 25 to 29-year-olds holding a median net financial wealth of minus £100.

That’s according to 26-year-old IFA Luke Turner, who cited data published by personal finance research firm NimbleFins last month.

“Not many people have that basic financial education, which is why I’ve started to reach out to people my age through LinkedIn posts,” Turner told FTAdviser.

“We’re the only age group in the UK from those 20 to over 65 with negative financial wealth. That’s a problem.”

Turner is a private client director for AHR Private Wealth. Prior to this he worked as a business development manager in Spain focusing on the expat market, before sitting his financial adviser exams.

In recent months, Turner - who is among the industry’s small 6 per cent pool of under-30 advisers - has taken to LinkedIn to try and help young professionals understand their financial positions.

Topics covered in his posts include sustainable investing, how to store your money, tax and how to get started with a few hundred or a thousand pounds in savings.

'People are messaging me directly and asking to talk about their financial plans.' (Carmen Reichman)

“A lot of people are messaging me directly and asking to talk to me about their financial plans,” said Turner.

“It comes down to a mindset. People are more inclined to go the other way [i.e. not seek help with their finances] because they get stressed about it.”

When you show someone numbers, everything changes.Luke Turner, AHR Private Wealth

Turner mentioned the pressure on many young professionals to get on the property ladder, for example. He intends for this topic to inform his latest LinkedIn post for under-30s.

The 26-year-old adviser said if young professionals are more informed on the basics and have things explained in a simple but not patronising way, they will feel less stressed and be more able to ask for financial advice.

“When you show someone numbers, everything changes. £15 per per month on a protection policy, for example, could cover them for up to £1mn. You can start to visualise how these policies are useful with numbers,” said Turner.

In a LinkedIn post about tax last month, Turner broke down the value of paying into a tax-free Isa using numbers.

“You can pay in £20,000 a year [to your Isa] every single year of your adult life and generate tax-free returns. If you manage to save just £1,000 per month into an Isa from age 25-60, your Isa could reach a value of £1.1mn by the end of this period,” he said.

Turner is also quick to follow up that getting people to consider their options without feeling intimidated is only the first step.

'As long as I can be visible online, I can support the younger generation.' (Carmen Reichman)

“Investments will go up and down. When you think about it, the largest asset invested is people’s pensions. You have to view savings in the same way, and that’s what I try to communicate with clients.

Older generations had it easy

When Turner is advising those below 40, he is often finding they are more likely to have done some of their own research.

However, Turner said he was "not worried at all" about whether more self-taught generations could disrupt the advice industry’s reliance on families keeping the same adviser.

"As long as I can be visible online, I can support the younger generation," he said. "I don’t really get enquiry emails from people below 40.”

He argued that younger people are conscious about making their own stamp on the world and are more open to modern ways of making money versus relying on well-trodden paths taken by family members.

“They’re inclined to do their own research,” said Turner. “They won’t necessarily do what their parents did.”

He added: “Older generations with large defined benefit pensions and cheap houses which have shot up in value have been able to grow a lot of their wealth pretty mindlessly. The market sort of did it for them.”

Fees made simple

Fee structures are not and should not be a barrier to younger people seeking financial advice, according to Turner. In fact, they are pretty easy to fix, he explained. 

“You just change the entire fee structure for someone with a little amount,” he said.

“Charging 1-3 per cent to set up a policy with £200,000 doesn’t work. Younger people don’t have these sorts of assets upfront. Instead of doing it all at once, you can have a policy management fee.

Fees structures are easy to fix, says Turner (Carmen Reichman)

“It’s better to have an insurance policy in your 20s. Premiums are so much lower. People can make their plan very watertight at an early age.”

Many advice firms still work almost solely with clients whose assets sit north of at least £50,000 due to their fee structures.

Unlike the majority, however, Turner’s employer AHR gives him what he described as “a good degree of autonomy” to serve younger clients in different ways.

“Everyone assumes that to make money, clients have to have a lot of wealth. That’s simply not the case.

“It’s about looking at how to get a young client set up in a tax efficient way,” he explained.

“You can set up investments and insurance which generate income for you as a company and at the same time help the individual.”

ruby.hinchliffe@ft.com