How millennials make money
A new generation of investors is looking for a coach, not an adviser, to help them get rich.
The new face of financial advice looks something like this: 010001101. At least that’s what doomsayers thought when the industry was under threat from scandals, the royal commission and the digitisation of everything financial. But robo-advice has yet to replace the human face of the industry, even if the faces in the industry have changed.
A few years ago, the average age of Australian advisers was 55 years and eight out of 10 were men. That profile was a legacy of an era when money was a male domain dominated by networks, packages and acronyms of finance, but the new face couldn’t look more different. Most of the high-profile entrants are young and many are women; they use the language of social media, the tools of tech and, while they must be across financial terms, they are more interested in busting the mystique than perpetuating it. They often use only their first names in promotional material.
They are people such as Victoria Devine, founder of She’s On the Money podcasts and co-founder of Zella, who says she’s “wildly passionate about empowering women to change their relationship with money” and is just as happy talking about a manicure budget as an ETF.
There’s Lea Schodel, who was awarded as a financial adviser but ditched her licence to set up a wealth advisory called Mindful Wealth, where she talks about financial flow, aligning wealth with wellness and, yes, developing mindful behaviours around money.
My Millennial Money is a podcast from Glen James and John Pidgeon, described as the Hamish and Andy of finance. Equity Mates is headed by a couple of 20-somethings who tackle investing strategies, risk management and money markets, and answer questions such as: WTF is an ETF? Stockspot is a share investment platform that embraces robo-advice and is happy to besmirch traditional sources of advice in promotional material.
Somewhat more suit-and-tie is Fox & Hare, which was set up by two ex-Macquarie bankers, Jessica Brady and Glen Hare, who offer a subscription service that promises the untraditional: “There’s a misconception that financial advisers are going to make you have a budget where you don’t get to do anything fun — that’s not our belief at all!”
The new generation of advisers makes full use of digital tools (and exclamation marks). They work with robo-advice models; use apps such as the Australian Securities & Investment Commission’s TrackMySpend and Pocketbook and savings apps such as Raiz that sweep accounts for spare change and put it to use. And, as Fox & Hare point out, they are more about lifestyles than retirement.
Millennials approach financial advice like it’s just another digital tool for life — and they expect it to work like that. And if some advisers such as Schodel blur the boundary between life coach and finance adviser, that’s OK with them.
This shift in focus for advisers has been picked up by the Association of Financial Advisers, whose president, Marc Bineham, recently said many advisers were chasing younger and more financially literate clients by moving into wealth coaching — a shingle that doesn’t need a financial services licence.
Young people traditionally have been shunned by an advice industry that relied on shaving fees from large investment portfolios and, although one survey found that a third of young people would prefer to ask Siri for advice than a finance professional, they are interested in managing their money.
A survey done by Accenture last year found that millennials are much more interested in investing than Gen X. People aged 23 to 38, it found, are keen to learn about investing and three-quarters are actively investing (although only one in five uses an adviser).
In comparison, those aged 39 to 53 are the least confident in investing and, although most are actively investing, they’re just as likely to use their own resources as those of a professional. The boomers are most likely to have a personal relationship with an adviser, although they aren’t too interested in the digital.
Millennials are less likely than any other generation to own their own homes but that seems to be more of an incentive to seeking investment opportunities elsewhere.
One book that reflects this and that helped spark their interest was Scott Pape’s The Barefoot Investor, which has sold almost 1.5 million copies.
The turnaround in advice is probably the fastest disruption in the financial space. CoreData just released a survey of ASIC’s register of financial advisers and found that 5025 advisers left the industry last year and only 78 joined. If the disrupters survive, the industry will be younger, cheaper, more fun and focus as much on the manicure budget as the retirement account.
