Can we fix the advice gap? Engaging Gen Z in financial planning at #Intergen 2020

It can be a mind-blowing concept, but what might the future of financial planning really look like?

Before I start this,  might I suggest being prepared to think just a bit differently about financial planning and how it is delivered in future?

At today’s #Intergen2020 conference, the session from Nils Elmark – a futurist – was snappily entitled “succeeding on a dream and a crowd – grabbing the attention of the next generation of investors”. It sounds great of course, but it could hardly fail to bring a whole new way of really powerful thinking for financial planning businesses. Especially those businesses which are serious about looking to the future and want to develop their business in a way which will appeal to Gen Y and Z as well as the more traditional client segments.

Why? These young people are not just the future but also the market and financial planning clients of the future. They matter. Not only do we need to grasp that concept but we also need to understand much more about what makes them tik tok (sorry – excuse the pun) if we are to provide the kind of service which is relevant and of value to them. For as long as I can remember (and I’ve been around a while!) those of us involved financial services have talked about the advice gap. The profession needs to do more than just talk about it. We need to be able to help younger people to get to grips with their finances and make better decisions around money which are focused on what is important to them. Making it happen has always been a tricky one however, as the cost of advice and the accompanying regulatory framework makes it hard for firms to deliver in this space.

 Incumbents v disruptors

It’s clear that most professional advisers operating in the financial planning space today are what Elmark calls “incumbents” a group of professionals who he suggests need to invest in the future if they are to futureproof their business. Of course, that is all well and good for the here and now, but if we try and fast forward a few years it can be a bit mind blowing but very exciting.

As a profession, it is clear that we need to think very seriously about supporting the needs of Gen Z – those people up to the age of 25 – who have a totally different perspective and approach to life – and the way they live it – to those of us who are somewhat older. Their attention span is short. They thrive on social media, on the gig economy, on the needs of people of dreams of being in a crowd or a tribe which shares the same interests, values and drivers. Ok, this might be generalising a bit but how do you penetrate that market? How can you adapt your finely-tuned processes to meet the needs of a client segment which operates in a completely different way?

It ain’t what you do…

That’s where Elmark’s session brought some much needed guidance. Highlighting numerous examples of businesses which have been designed to flourish in this segment (not necessarily those related to money) his advice to firms is to start by having bigger and braver dreams and a vision of what they want to achieve. It’s that businesses which really resonate with Gen Z start off with a dream and a strategy and then build the delivery around that vision which will thrive in the online market. They are typically built from scratch rather than being developed by an incumbent but there are no barriers to entry – it’s just about thinking differently. We know that matters of sustainability and people really matter to Gen Z. Elmark’s advice is for incumbents to learn from them and as opposed to trying and teach them to “grow up”. His encouragement for incumbents to get to grips with some of the social media apps and ways that young people are engaging with money today will be a great place to start.

The good news for incumbents is that there is strong demand and interest in financial planning from Gen Z. They are scared about the future. Their income is less stable and predictable and there is nervousness about major commitments such as a mortgage or investing, and strong tribal drive. But advice is still needed and it needs to operate in their arena and scope of understanding what it takes to succeed. Can the sector deliver?

What if it doesn’t? The scary bit is that if today’s younger generations get too used to the likes of market trading apps which have seen huge rises in popularity this year, then as their wealth grows they’ll stick with what they know rather than revert to the more traditional forms of advice which their parents and grandparents have come to value so highly.

Elmark’s final words resonate here – that we need to create a brand new world but we have to dream it before we can create it. Are the incumbents up to the task? Let’s hope so.

Nils Elmark is futurist, founder and CEO of Incepcion Ltd. that helps businesses create new commercial visions, strategies and dreamscapes.