How Can IFAs Appeal to Millennials?
The millennial market of people born in the period between the early 1980s and the mid-1990s is one that the IFAs are desperate to get their hands on. This is the future of their business at stake.
Financial advisers know the value of planning for the future more than most people, which is why their keen to build a portfolio of clients ready to replace their older clients.
It’s not an easy task though, not least because the millennial generation have grown up in the midst of the financial crisis. Expensive house prices, low savings rates, and poor access to jobs have been the norm throughout their adulthood up until the present day.
It means the average millennial barely has enough assets to be advised on, let alone the money to pay IFAs annual fees.
It’s difficult to overestimate the strain on this generation. They’re set to become the first to earn less than their predecessors over the course of their working lives. Add this to an increased life expectancy and it’s not an exaggeration to suggest they might need a million dollar pension to live comfortably in retirement.
The problem of connecting with millennials is one that mystified many IFAs. There’s no doubt a change of strategy is needed - and this will have to go beyond creating apps to connect with the tech-obsessed ‘everything at their fingertips’ nature that today’s young adults have nurtured.
How to Reach Millennials
Many surveys of millennials have indicated that the majority of people in this generation don’t believe that financial advice is suitable for them. In one questionnaire issued as part of the PIMFA 2017 Millennial Forum, two thirds of respondents described this service as “not relevant” to them. Most suggested this was because of the size of their investment pots.
IFAs have been advised to lower their costs and take initial losses in order to boost their portfolio of younger clients, with the aim of retaining them over the long-term future. This could potentially involve the lowering of minimum investment thresholds, so that more millennials are able to access professional advice if they want it.
Tailored Advice for the Next Generation
Their advice might have to tailor the actual advice they give to this generation too. Millennials are the generation that want freedom from responsibility. They’re less likely to want the responsibility of maintaining a house or a car. They’ve grown up in the era of Uber and Airbnb, where other people deal with the maintenance and responsibility. A strategy centered around ‘a mortgage at all costs’ followed by savings and other assets, might not be what millennials are dying to hear about in the current climate. Any sort of tax-efficient savings product which allows them to save on tax would prove useful, as they try to establish some sort of pot to invest for the future.
The firm that nails how to revamp financial advice for millennials could strike big, just like Uber struck it big by revamping the respective industries.