The question “Do millennials use financial advisers?” is critical to understanding how millennials both think and act when it comes to their personal finances.

 

Only a small number of people use a financial adviser in the UK with some estimates as low as 8% and of this figure, a much smaller number are of the millennial generation (known as generation Y and born between 1982-1994), the older generation X (born between 1965-1981) or the younger generation Z (born between 1995-2010).  It’s mostly the baby boomers or older who use financial advisers if only because these older generations have most of the wealth.  It’s unlikely that many millennials use financial advisers at all, meaning that of the 8% or so of people who use a financial adviser no more than 1% (one in eight) of them are millennials or younger.

 

 

The fact remains that most financial advisers are remunerated based on the funds under management model.  Typically they will charge an up front fee of 1%-3% and a 1% a year annual recurring fee.  These fees are usually deducted from the investments and/or pensions they manage for you.  Most advisers have a minimum investment amount of at least £100,000 before they will accept you as a client.  Some financial advisers charge fees but most clients aren’t keen on paying directly from their bank account for a service which is entirely optional unless the fees are very modest.  Therefore not many millennials use financial advisers because they do not usually have enough wealth to manage.

 

Most millennials and the younger generation Z prefer to use apps such as Nutmeg, Moneybox or De Giro because they are low-cost, quick to use and they accept modest investment amounts.

 

 

The trouble is, that leaves huge gaps in what millennials actually need such as financial coaching, financial planning, lifetime cash flow planning, tax advice and general financial advice.

 

One of my own millennial sons was faced with a tricky tax situation for the first time recently when buying his first property.  Up to that point he had simply used financial apps.  He, like most millennials, is not aware of how much help and advice he will potentially need in the future.  Apps can only help you so much.  The human touch is vital too.

 

 

Do millennials use financial advisers?  Yes, they do but far too few currently.  Things have to change and I’m sure they will.  Already some companies are creating financial advice models for millennials.  I expect there will be a plethora of new financial services for millennials in the near future to meet their unique needs.  You know it makes sense.*

 

*Risk warning 

The value of investments can fall as well as rise. You may not get back what you invest. 

This blog is based purely on my personal opinion and experience. You should always seek advice from a professional before investing your money. The contents of this blog are for information purposes only and do not constitute individual advice.