There is a prevailing idea that financial advice is solely reserved for the wealthy elites who have accumulated masses of generational wealth and disposable income, ready to be deployed into a high-growth project or complex financial instrument.
Many young people echo this sentiment. When asked about why they had not yet attempted to seek financial advice, one student at University College London said they felt they did not “deserve a financial adviser”.
However, times are changing – with the average age of financial advisors reaching 57, high attrition rates in the sector and a large war for talent globally, employers are frantically chasing the optimal methods of attracting and retaining the best people.
This has to include hiring the very sort of young people who traditionally would not seek advice.
Young people are leveraging next-gen technology to expand their capabilities. Social media such as LinkedIn and other online forums have democratised access to financial education and advice.
Young people have been at the forefront of this, with many building their own financial ed-tech companies, and garnering millions in venture capital funding.
Trendsetters
Many young people have been quick and curious to adopt new trends, such as NFTs and cryptocurrencies, while developments in financial services provision, specifically in generative AI, may well level the playing field for advisers young and old.
Financial edtechs and personal finance apps have paved the way for a new epoch of financial advice, increasing offerings for the retail investor to manage and track their spending.
For example, Canadian financial planning app Planswell has excelled in providing lots of free content and creating a blend of tech-enabled services for families, homeowners and pensioners.
But despite the emergence of so-called finance super apps, a study by Hugh Kim et al indicates that increased financial literacy does not affect the quantity of financial advice, but rather the quality of expertise required to provide meaningful support.
Whereas many of the general public may have otherwise outsourced this to friends and family, the study suggested even a one standard deviation increase in financial literacy resulted in an 6.8 per cent increase in likelihood of professional support being sought.
Empathy
The structural and macroeconomic plights have made Gen-z resilient and more empathetic - key soft skills needed in the advice profession.
However, the media has largely projected a disdainful narrative of Gen Z’s lifestyle decisions, influencing both decision makers and Gen Z’s own beliefs.
According to a King’s College London study, 48 per cent of baby boomers and 43 per cent of Gen Z believe discretionary spending is a root cause of their inability to make it on the housing ladder. But is it really the Starbucks lattes that are preventing us from reaching financial freedom?
In contrast, another recent study stated that 74 per cent of millennials and 58 per cent of Gen-Z had already begun - or were in the process of - consulting a financial adviser, reporting a desire to kickstart their “investment journey” or “avoid financial difficulties”.
