21May

The Personal Investment Management and Financial Advice Association (PIMFA), a trade association that represents financial advisers and wealth managers, is conducting a major study, known as the Millennial Forum, looking at how it might engage with future generations.

The Association cites research by accountancy firm Deloitte which suggests that millennials – usually defined as those born between 1982 and 2004 – will make up 75% of the global workforce by 2025. It therefore recognises the need to address the concerns of this generation, and notes that, in light of the 2007 financial crisis, the financial services industry is still viewed negatively by many young people.

A final report will be issued in November 2018, but PIMFA has already issued a preliminary Millennial Report. The Executive Summary of this Report states:

“It is a very different world for millennials, and we must not underestimate the impact this will have on them as clients and on the industry. This generation has more financial hurdles such as high property prices and less lucrative retirement benefits, but given the means through inheritance, and/or their own earnings, many would be willing to use a wealth manager.”

PIMFA believes that the challenges posed to the advice and wealth management profession by the millennial generation include:

  • Property prices are often prohibitive, preventing young people from getting onto the housing ladder
  • The idea of a ‘job for life’ is now unrealistic for many people, and large numbers of younger people can expect several career changes during their working life
  • Pensions are no longer guaranteed at pre-determined levels
  • Firms may need to look at revising their fee structure and/or their minimum investment levels to accommodate the needs of millennials

Although many millennials are undoubtedly very tech-savvy indeed, PIMFA says its initial research indicates that this generation still highly values face-to-face advice. With concerns over data protection and firms’ handling of personal data attracting considerable publicity, the Association adds that many millennials are comfortable with the idea of firms processing and sharing their data, provided “it can be proven to be secure and produce tangible benefit.”

The Report also suggests that more needs to be done to recruit younger people to work as advisers and wealth managers, indicating that younger people are more likely to engage with someone whom they believe better understands their concerns and financial goals.

Findings from PIMFA’s survey of millennials include:

  • 67% say that the wealth management sector is either of no relevance (34%) or of little relevance (33%)
  • 49% had negative perceptions of wealth managers
  • The average millennial was allocating 25% of their income to a mortgage and 20% to regular saving, leaving only 11% for investment and 10% for retirement savings
  • 28% would be likely to approach a smaller advice firm if they needed financial advice, while only 16% would approach a larger firm. However, 30% would approach family or friends as their first port of call

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article