We all know that not enough consumers are seeking financial advice. Just 9 per cent have paid for advice in the past two years, according to the Lang Cat’s Advice Gap 2024 report, down from 11 per cent in 2023.
Those who do take advice tend to be older and already wealthy.
Our Advice Map of Britain report, which analyses more than 3mn client records within Intelliflo Office, shows that nearly half of those who receive advice are between 50 and 60-years-old.
Encouraging more people, especially young people, to take regulated advice is vital to improving the UK’s overall long-term financial resilience, as well protecting the long-term success of the advice profession.
The widening advice gap
Despite making up 20 per cent of UK residents, Gen Z, which broadly covers teenagers and 20-somethings, barely features in the advised population.
Our data tells us that just 4 per cent of under 30s are receiving advice.
And it seems this generation is becoming even less attractive to advisers.
The Lang Cat’s advice gap research found that the number of firms turning away less wealthy clients or only serving them under strict conditions had increased versus 2023, while those with a specific proposition for those with fewer assets had fallen.
The consultancy suggests the year-on-year change was likely due to the impact of Consumer Duty.
Yet there is no doubt that Gen Z would benefit from access to advice.
Young people are facing huge financial stresses: high student debt, an uncertain job market, surging rents and property prices, the cost of living crisis – the list goes on.
Although it is understandable that firms want to focus on their traditional client base, I would argue that the importance of younger people to the future of advice firms should not be overlooked.
Gen Z are the mass affluent individuals of the future, not least because the significant sums of money expected to transfer between generations in the next two decades.
Abrdn estimates that £5.5tn worth of assets in the UK will move within families by 2050.
Nurturing younger clients as they accumulate wealth will help build loyal long-term relationships, which will be crucial to future success given that 63 per cent of advisers have concerns about losing business as wealth is passed down the generations, according to research by Schroders.
Appealing to Gen Z
So how can the advice profession support young people into saving and investing and build lasting relationships with the wealthy individuals of the future, in a way that is cost effective and compliant?
I think the solution must be in harnessing digital technology. Gen Z is the first generation of true digital natives, growing up with technology at their fingertips that would have been in the pages of a sci-fi novel when many of today’s advisers were growing up.
For advice businesses, using the right digital technology to reach people who are already wholly receptive to it brings multiple advantages.
