PIMFA
14 December 2023
PIMFA’s Under 40 Leadership Committee report reveals need for advice industry to focus on the future
- 75% of under 45s say they would consider making a financial decision, or indeed already have, based on the recommendation of the social media ‘finfluencer’.
- 49% of Gen X and 63% of Baby Boomers never talk about their finances with friends, while over 80% of Millennials and Gen Z do at least annually.
- 58% of people in the UK have never discussed inheritance with their family members.
- Women generally feel less confident when it comes to making investment decisions and require support from advisers to help them feel comfortable around investing.
- Time to embrace personalisation, the use of tech and shake up annual reviews.
Three quarters (75%) of those under the age of 45 have either already bought a financial product, or would consider doing so, on the advice of a so-called social media financial influencer, or ‘finfluencer’, research from PIMFA, the trade association for wealth management, investment services and the financial advice and planning industry has discovered.
This is just one of the findings of PIMFA’s annual Under 40 Leadership Committee report conducted in partnership with market research firm Savanta – which surveyed 500 people from across the UK – focused on the future of financial advice, how it is delivered and to whom.
This year’s areas of focus have included how to make financial advice more accessible to women, how the wealth management industry can better help those who receive an inheritance, how to make long-term saving and investment more appealing across generations, and the role of social media in financial advice and the threats and potential opportunities it may present.
The report focuses on some of the major issues that will face the industry in the coming years, with women living far longer than their partners and an estimated £5.5 trillion of global wealth expected to pass down to spouses or their children in the coming decades and the growing influence on social media and how it is potentially filling the ‘advice gap’.
The research revealed diverging attitudes across generations to finance and financial advice, with 49% of Gen X and 63% of Baby Boomers admitting they never talk about their finances with friends, compared with over 80% of Millennials and Gen Z who said they do so at least annually. Millennials also speak with a financial professional more than any other generation; 70% said at least annually. It also found sustained support for more personalisation and a ‘Simplified Advice’ model – both of which are currently being investigated by the Financial Conduct Authority (FCA) – and a shake-up of the annual review of clients’ circumstances.
The research also revealed women generally feel less confident when it comes to making investment decisions and require support from advisers to help them feel comfortable. A majority of women who have already made some investments, 55%, said they either felt intimidated by investments, that financial advice wasn’t aimed at them or wouldn’t know what value they would get from financial advice. This was compared with 45% of women who had never invested but expressed the same sentiment. However, 30% of this cohort also said they wouldn’t know where to go for financial advice compared with 21% of women who had already invested in something.
The way products are promoted and discussed is also more of a barrier to taking advice than there being a lack of appropriate products. A fifth (21%) of female investors and 17% of female non-investors said they felt intimidated by the investment world.
When it comes to inheritances, the research discovered economic disparities between families, with 52% of those who earn over £100,000 per annum expecting to receive an inheritance, having discussed Powers of Attorney or later life care with the generation above, compared with only 22% where income is below £30,000 per annum.
Moreover, 44% of Individuals who anticipate receiving an inheritance are reluctant to open a discussion within their family, citing concerns about mentioning mortality. And up to 90% of beneficiaries do not use their parents’ wealth manager after receiving a bequest.
The influence of social media on the public’s financial decision making may also have been underestimated by government and regulators. Asked if they had seen social media personalities sharing posts relating to financial advice or information (eg. investing, stock or currency trading, personal finance) significant numbers of those under 45s said they had. Two-thirds (67%) of those aged 18-34 said they had viewed financial posts from social media personalities, compared with 43% of 35 to 54 year olds.
Existing investors are far more likely to have seen such posts (57%), as were those with investable assets over £500,000 (64%). Alarmingly, the research also found 75% of under 45s had either made a financial decision based on the ‘advice’ of a social media personality or would consider doing so in future.
The report also contains a series of recommendations for the industry, government and the regulator to help improve access to advice and comes just days after the FCA put forward proposals to widen access to more people in the UK.
Liz Field, Chief Executive of PIMFA, commented: “As in previous years, the Under 40 Leadership Committee report has sought to address hot topics facing our industry that the leadership committee and wider firms are likely to be dealing with in the coming years, bringing to light fascinating insights from their primary research and outlining how the industry, government and regulators can work together to ensure a better future.
“The results of our survey are both interesting and noteworthy, with some particular findings striking an alarming note and further highlighting the urgency around some of the concerns held within PIMFA and our membership.
“I’d like to extend my heartfelt thanks to everyone who has given up considerable time and worked so hard to produce this report. There are some very sensible recommendations for the industry, government and regulators to take note of, and I truly hope the report starts a number of discussions about how we can ensure that we serve the public and help them achieve their financial goals.”
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NOTES TO EDITORS
About PIMFA – the Personal Investment Management & Financial Advice Association
- PIMFA is the trade association for firms that provide wealth management, investment services and the investment and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
- The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
- PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families to charities and pension funds, all the way to trusts and companies. Associate members provide professional services to the PIMFA community.
- PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
- PIMFA has made numerous recommendations to the FCA regarding the Future of Advice, the Future of Supervision and the FSCS levy – read more.
- PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
- Find out more about PIMFA’s Diversity and Inclusion work – read more
- Further information can be found at pimfa.co.uk
- Find out more about PIMFA’s Under 40 Leadership Committee here.
- Find out more about PIMFA’s Diversity and Inclusion work here
Contact
For further information on this release or other press matters please contact:
Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376
Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869
