Recent research suggests that 8.4 million UK adults aged 35-44 are shunning traditional investment and advice models and are being let down by a Government and financial services industry which continues to pander to the wealthier Baby Boomers. But do you agree?
Independent consumer savings and investments information site, ‘Boring Money’ published a White Paper calling on the UK’s financial services industry and the Government to urgently address the needs of millions of young adults who have been neglected as part of a ‘Lost Generation’.
The research identifies that this is not just an age issue but a generational issue. Younger ‘Diligent Millennials’ are more likely to seek financial advice and also more likely to take out a stocks & shares ISA.
Key Research Findings
Just 5% of 35-44 year olds report having a stocks & shares ISA compared to 10% of 25-34 year olds
Other than 18-24 year olds, they are also the least likely group to own stocks and shares
This is not just a lack of cash – more than 1 in 5 of 35-44 year olds has more than £5,000 sitting in a current account, at a time of historic low interest rates.
Only 22% have a private pension – fewer than the 25-34 year olds surveyed
Traditional face-to-face advice is shunned. Even after emphasising the financial losses which poor decision-making can lead to, 35- 44 year olds remain unconvinced about going to see an adviser. 36% still wanted to go it alone, online at home, compared to 31% of Diligent Millennials and just 20% of 55-64 year olds.
Holly Mackay, MD of Boring Money, comments:
“We were surprised to see such a clear divide in behaviours by generation. Older savers continue to engage as before. Younger millennials, sceptical about relying on the State for future retirement income, are taking more financial responsibility for their future. But 35-44 year olds are floundering and the Government and the wider financial services industry has to take responsibility for this ticking timebomb.
“The industry needs to tackle this problem head-on and deliver clearer messages, rules of thumb and understandable case studies in a digitally-savvy way. As the powers-that-be enjoy wordy debates on the nuances between “advice” and “guidance”, people are in desperate need of good old-fashioned help, delivered in convenient smarter ways.”
TIRED PARENTS – the reverse ‘Larkin’ effect as children add to the pressure
The picture gets worse for Tired Parents – those aged between 35 and 44 with a child aged 7 or under at home. With young children and ageing relatives, jobs to go to and homes to run, this ‘tribe’ is uniquely time-poor.
Although this demographic is time poor and not engaged, they are not insensitive to this. Of our 35-44 year old parents, 27% say that they worry about their finances but do not know what to do and 14% are usually “too tired to think about anything financial” and 15% “put their head in the sand”. However, at the other end of the spectrum, 25% say that parenthood has resulted in changed attitudes and they have become “more responsible and a better saver.”
Convenience has to be King
Tired Parents are also not getting the answers the way they want them. At this stage, convenience rules and current models are clearly not working. When presented with various options around investing, 29% of our 35-44 year old parents preferred a solution which could be opened at home in less than 10 minutes, significantly higher than the national average.
Exceedingly risk averse as a group, Tired Parents show signs of ‘reckless caution’. Just 1% of Tired Parents have a stocks & shares Junior ISA, compared to 19% who hold a cash Junior ISA
Current advice delivery models are not appealing and this generation demands a digital solution which can be actioned at home. Just 9% of Tired Parents found the lure of 2 hours of free financial advice in an adviser’s office more appealing than alternative options including online DIY models
This challenges the perception that people are not seeking financial advice simply because of the cost factor.
Tired Parents work to a different timetable and do not digest financial information or do financial admin at the weekend. As a broader group 35-44 year olds are most likely to listen to social peers rather than formal advice or the national press.
There is a huge opportunity for the industry to reach out to this disengaged, yet web-savvy cohort who are turning their backs on private pensions, stocks & shares ISAs and traditional financial advice models.
“The research we did for our white paper confirms what we hear from consumers: 35- 44 year olds feel particularly disengaged with their finances. They feel mistrustful of the industry and are concerned about where to turn for advice. Time and convenience is a new dimension the industry has been slow to address, and this is markedly so for our Tired Parents. Simple authentic language and ease of access will be key success factors for anyone trying to engage this group of customers”.
Boring Money supplemented its quantitative data using qualitative interviews with financial advisers and Tired Parents.
Wills, life insurance and Junior ISAs were identified as the three key areas for Tired Parents to understand and therefore form the heart of the campaign which has been launched. The campaign adopts clear, simple language and uses engaging Guides, Facebook videos and games to engage.