Gen Ys sceptical and questioning value of advice
There is a high level of scepticism around the value of advice among Gen Y with many querying what planners can offer that is not already on offer elsewhere or can’t already be accessed by their own research efforts.
At the same time many feel that while they do not need financial advice they would be happy to receive some form of financial coaching and guidance according to a report released by KPMG covering the banking and financial services needs of Gen Y consumers.
The report – titled Banking on the Future – surveyed 1400 Gen Y employees of KPMG and found that 84 per cent stated they did not need financial advice and 95 per cent did not have a financial planner, despite the survey cohort being described as well-educated and well-paid.
KPMG Partner and Head of Financial Services Consulting Daniel Knoll stated that despite these low levels of engagement with financial advice 65 per cent of those surveyed where interested in some form of financial coaching but were reluctant to pay for it.
“There is a healthy scepticism of among the respondents around the value of advice they can get from a financial adviser. They are asking ‘what can this individual tell me I can’t find out myself?’”
“There was also a trend towards more collaborative financial planning models and the move away from ‘set and forget’ delegated planning models where money is given to a planner and set some parameters and hope for a return.”
“What we are seeing coming to fore is a validating model around financial planning with the participant and the planner are more regularly involved and validating one another’s perspective on the planning journey.”
Knoll said the lack of engagement with financial planning advice likely stemmed from recent reputational issues among bank based advice services as well as a lack of knowledge as when they should engaged with advice with many of those surveyed not considering they had sufficient wealth to invest.
“There is a scale challenge and these people don’t know when to enter the wealth arena while the notion of paying hundreds of dollars to invest a couple of thousand dollars did not seem a like a great return on investment,” Knoll said.
Knoll said that while the report focused on the relationship of Gen Y’s with banks and bank-based financial advice the latter would still have a role to play with advice set to move up the complexity tree as other services came in under the traditional advice model and provided entry level advice.
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