A recent Public Accounts Committee (PAC) report has warned of a “perfect storm” among younger savers for whom pension contributions seem unaffordable. The result will be a generation who reach retirement age with insufficient funds. The report blames the high cost of living and rising house prices.

The global economy, the effects of the coronavirus pandemic, and the impact of social media have added to the problem too, making it clear that many of your millennial clients are in urgent need of financial advice.

At Boolers, we can help your clients overcome many of the unique challenges they face.

Keep reading to find out how.

Millennials face unprecedented financial barriers

The Resolution Foundation’s Intergenerational Commission Report back in 2017 found that millennials were the first generation in over 100 years who would be financially worse off than their parents.

Reasons for this include high levels of university debt, unaffordable housing, and wage stagnation. Reports also suggest that more than 70% of household wealth in the UK is controlled by those aged over 65.

Since the report was released, the coronavirus pandemic has had a disproportionate effect on young people.

The BBC confirms that young workers were nearly two-and-a-half times more likely to work in a sector affected by the coronavirus lockdown. What’s more, government measures to protect jobs and the economy will need to be paid for by future tax reforms that could also fall onto the shoulders of this same cohort.

Possibly as a consequence of this, younger people are becoming increasingly engaged in their finances. FTAdviser reports that three-quarters of millennials sought advice during the pandemic. But half of 18- to 24-year-olds also confirmed that they had become more risk-averse in the same timeframe.

Here are just three ways Boolers can help.

1. Understanding the need to invest for the long term

In June 2021, FTAdviser figures showed that 52% of 18- to 34-year-old investors said they were more risk-averse since the outbreak of the pandemic. A similar number confirmed that they had put off making major financial or investment decisions in the past 12 months.

The uncertainty of the pandemic, coupled with the increased danger of redundancy and furloughing for those in this age group, makes reticence to make big financial decisions understandable. But risk aversion, especially at a young age, could have huge long-term consequences.

Starting to invest early allows your millennial and Generation Z clients to make more contributions, to experience the benefits of compound growth, and to make the most of the markets generally upward trend.

Seeking advice from professionals with experience and expertise in the markets can give investors a sense of control over their investment decisions and the level of risk their money is exposed to. Being in control means inexperienced investors should have the confidence to remain patient and ignore the noise when market prices fall, as they did at the start of the pandemic.

2. Seeking advice from the right sources

Increased financial engagement during the pandemic is good news (74% of millennials spoke to an adviser). But not all of your clients will be seeking professional advice or looking for advice in the right places.

A recent Independent report confirmed that a fifth of under-35s see social media as their most valuable source of information.

Unregulated advice from platforms like TikTok or Facebook can lead to investors trying to play the market, chasing big returns through following online trends. Emotional and knee-jerk decision making has the potential for large losses.

The rise of cryptocurrency has helped to increase the popularity of online videos providing investment “tips”. The possibility of the bitcoin bubble bursting, the stratospheric rise and fall of dogecoin – a 14,000% rise followed by a 35% drop overnight – and the GameStop losses for short-sellers caused by “Reddit rebels” should all be cause for concern.

Seeking advice from regulated professionals is the best way to receive long-term financial advice and the Boolers team are here to help.

3. Starting early and paying your future self first

While the PAC report looked at public service pensions, the need for millennial clients to save for their future exists across employment sectors.

Good financial planning will involve a holistic look at an individual’s financial present and a long-term plan for the future. This might involve:

• Budgeting advice
• Cashflow modelling
• Building an emergency fund
• Paying off high-interest debt
• Investing in the future through tax-efficient products like ISAs or pensions.

A patient approach over the long term is the best way for millennials to enjoy financial stability and is likely to reap much greater rewards than high-risk trend-chasing investments or get-rich-quick schemes.

Get in touch

If you have younger clients – or clients with younger children – who need help putting the building blocks in place for a financially secure future, they might benefit from expert advice. Please get in touch via email at enquiries@boolers.co.uk or call 0116 240 7070.

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.