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)! Consumers financial habits are changing and, thanks to our friends at @facebookiq, we are starting to prove just how much.
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 modern consumers are different from previous generations in four key areas:
1. Bitten by the Past:
The Great Recession hit younger generations 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 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 consumer generation who can investigate and come to conclusions without needing to speak to ‘advisors’. We ‘crowdsource‘ knowledge. Unlike the days before ubiquitous technological access, this makes it far easier pull from a variety of sources before making informed decisions. Facebook tells us only 8% of 20 – 35-year-olds surveyed ‘trust financial institutions for guidance’. Our goal is to help the remaining 92% and pull from other generations, to contribute to our financial knowledge community.
3. Technology + Online Advisors:
Consumers are more informed than ever. 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 ‘high net worth’ individuals. 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…….