Recent research reveals a striking irony in today’s financial advice market: younger people are increasingly looking for financial guidance, just as advisers are offloading clients who fall outside their target profiles. This disconnect raises important questions about accessibility, fairness, and the future of financial advice.
Younger Generations Turning to Financial Advice
Chancellor Rachel Reeves’ recent Autumn Budget has driven almost one in ten (8%) 18-24-year-olds to consider financial advice for the first time. With 11% of young adults already planning to seek advice and 4% currently working with advisers, this demographic is clearly engaging with their financial futures. Yet, the same survey found that a significant 27% of this group remains unaware of budgetary changes, highlighting a knowledge gap that advisers could help address.
These findings present an opportunity for financial advisers to connect with a generation eager to start their financial planning journeys. However, the advice profession faces challenges that may hinder these connections.
The Offboarding Trend: A Barrier to Inclusivity
Parallel research from NextWealth shows a troubling trend: 72% of advisers are ending relationships with more clients than usual, with 58% planning to accelerate this process in the next year. Regulatory pressures, increased costs, and a focus on higher-value clients are driving this shift. Many advisers feel conflicted, as they grapple with the balance between fair value and their obligation to serve all clients.
This shift often leaves younger clients—those with smaller pension pots or ISAs—out in the cold. For these clients, the loss of accessible advice can have long-term repercussions on their financial well-being.
Bridging the Divide
So, how can we address this growing gap between young people seeking advice and the profession’s evolving focus? Here are some actionable solutions:
- Adapting Service Models
Financial advisers could consider flexible, technology-driven service models that meet younger clients where they are. Hybrid advice solutions combining automated tools with human expertise can make financial planning more affordable and accessible. - Education and Engagement
Bridging the knowledge gap is crucial. Advisers could take a proactive role in educating younger clients about financial planning basics, helping them build confidence and long-term loyalty. - Emphasising Human Capital
Instead of solely focusing on financial capital, advisers should guide young clients in developing their earning potential, skills, and career trajectories. This holistic approach aligns with their immediate needs and creates opportunities for lifelong relationships. - Collaboration Over Competition
Firms offboarding clients could establish referral partnerships with organisations specialising in serving younger or lower-value clients. This ensures clients continue to receive support, even if they no longer fit a firm’s profile.
A Call to Action for the Industry
As financial advisers refine their focus, it’s crucial to avoid unintentionally widening the advice gap. By embracing innovation and collaboration, the profession can serve both its business interests and its clients’ needs. The younger generation represents not only a challenge but also an opportunity to foster financial literacy and build lasting client relationships.
Let’s ensure that financial advice is not seen as a luxury for the wealthy, but a foundation for all who aspire to financial security and independence. By meeting younger people’s needs with creativity, empathy, and inclusivity, advisers can pave the way for a more equitable and sustainable financial planning landscape.
Q&As: Bridging the Financial Advice Gap
Q: Why are more young people seeking financial advice now?
A: The recent Autumn Budget has highlighted financial challenges that resonate strongly with younger people. Many 18-24-year-olds are starting to realise the importance of getting professional guidance to navigate these changes. It’s an exciting sign that younger generations are becoming more proactive about their financial futures, recognising that starting early can make a big difference.
Q: Why are advisers offboarding clients, and what does this mean for young people?
A: Many advisers are under pressure to demonstrate “fair value” to their clients, and increased fees and regulations mean they’re focusing on those with larger portfolios. Unfortunately, this often leaves younger clients—who may have smaller savings pots—without access to traditional advice. This highlights the need for more inclusive solutions tailored to those just starting their financial journeys.
Q: What options are available for younger people who can’t access traditional financial advice?
A: Fortunately, there are growing alternatives. Many firms now offer hybrid advice models, combining digital tools with human support to keep costs down. Financial coaching and education platforms, like the Academy of Life Planning, empower people to take control of their finances with the guidance they need to succeed. These solutions are designed to meet younger people where they are, ensuring advice is accessible and affordable.
Q: How can financial advisers better support younger clients?
A: Advisers can adapt their service models to focus on the specific needs of younger clients. Offering flexible, goal-based advice that incorporates human capital development—like career planning and skills building—can create lasting value. Advisers who invest in relationships with younger clients now are setting the stage for lifelong partnerships.
Q: What steps can younger people take to get started with financial planning?
A: Start by educating yourself. Look for resources and platforms that provide clear, unbiased financial guidance. Think about your goals—both short-term and long-term—and how your finances can help you achieve them. Whether it’s using a digital advice tool, joining a financial coaching programme, or working with a holistic financial planner, taking that first step is crucial.
Q: How does human capital development fit into financial planning?
A: Human capital is all about building your earning potential, skills, and opportunities. For younger people, this can mean prioritising education, career development, or even entrepreneurial ventures. By focusing on these areas alongside saving and investing, you’re building a strong foundation for long-term financial success.
Q: What should I look for when choosing a financial adviser or coach?
A: Look for someone who listens to your goals and tailors their advice to your situation. The best advisers or coaches focus on empowering you to make informed decisions. They should be transparent about fees, provide clear explanations, and prioritise your long-term success. Platforms like the Academy of Life Planning can also guide you in choosing the right support for your needs.
Q: What’s the key takeaway for younger people about financial advice?
A: Don’t let barriers discourage you. Financial advice is not just for the wealthy; it’s for anyone who wants to build a secure and meaningful future. Start small, ask questions, and seek guidance from resources and professionals who focus on making advice accessible and relevant to people like you. Every step you take now will make a big difference down the road.
These answers aim to inspire action, provide clarity, and reassure young people that support is available to help them take charge of their financial futures.
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