Welcome back to Wealth-Hack where we are tackling the ever thorny subject of financial advisors. During this post, we will explore conflicts of interests, changes to the way people engage with the financial sector and of course, where you can find an impartial financial advisor online (spoiler alert, it’s us)! Our generation is different and, thanks to our friends at @facebookiq, we are starting to prove just how different.
20/30 years ago, there were two paths for complex financial decisions; a financial advisor, or straight to the financial companies. Our parents’ generation trusted them to ‘do the right thing‘. They also trusted them to deliver advice that was good for both parties. As we have unfortunately seen through the Great Recession, the financial industry and doing the right thing are very often strange bedfellows!
How are We Different?
Based on Facebook’s analysis and other independent exercises, I believe we are different from previous generations in four key areas:
1. Bitten by the Past:
The Great Recession hit our generation more than others. Older millennials had job losses, reduced access to loans and increased risk of home foreclosures. This lowered quality of life and financial well-being. For many younger millennials, it was perhaps tougher still. Rising unemployment made it tough to get that first job. Once in work starting salaries were lower than expected also. And for those with a home ownership as a goal, tightened lending practices made that an impossible mission for many. No surprise that we have the lowest trust levels in the financial industry itself.
2. Trust in authority:
Easy access to credible knowledge created a generation who can investigate and come to conclusions without needing to speak to ‘advisors’. We ‘crowdsource‘ knowledge. Unlike our parents’ generation, this makes it far easier pull from a variety of sources before making informed decisions. Facebook tells us only 8% of millennials surveyed ‘trust financial institutions for guidance’. Our goal is to contribute to our financial knowledge community which will help the 92%.
3. Technology + Online Advisors:
Millennials are more informed when it comes to fees than previous generations. In the past, it was easier for advisors/financial companies to hide fees within products. Easy access to online comparison reviews and a move to online advisors has given us all a transparent view of cost/benefits. This is changing where we shop, for the better.
Things are Changing
Traditional financial companies are learning slowly. But they are still focussing more on the ‘Gen X’ers who (today) have more money. However, an entirely new sector is being built from the ground up named ‘FinTech‘.
The FinTech sector understands that we are different. We need transparency. That we want to talk to online advisors, using the mobile/web first. That we stay away from high fees and want to transact with ethical companies. Companies such as RobinHood are transforming free access to individual stocks. Stash (simplified, low cost access to ‘themed’ funds), WiseBanyan (fee free investment app) and Acorns (automatically invests your spare change) are democratizing access to investment products. All are growing rapidly as the focus is very much on millennials.
Wealth-Hack aims to support your introduction to this new sector. We will do this by highlighting useful financial techniques, best practice advice, and tools for your financial well-being. We hope to be your virtual online advisors and will do so without the conflicts of interests that impact traditional financial advisors.
What do you think? Have I overplayed ‘the great recession’ impact? Is the true lack of engagement with the financial sector due to a lack of disposable income? Be great to discuss this important topic with a cross section of the Wealth-Hack community…….