Younger investors favour automation and holistic advice

Millennials are the generation that has grown up with computers, smartphones and the internet. Generation Z even more so. It’s perhaps not surprising then that when they’re looking for financial advice they are more open to an automated approach than are other generations.

Part of the reason for this is that younger potential clients may also be seen by financial advisers as relatively poor prospects, with little spare cash to invest – But that is to overlook the financial challenges younger generations face and by ignoring younger investors advisors could be denying themselves a business opportunity.

Automated advice

Even those that do use more traditional advice are also likely to use some form of automated advisor as well. This involves delivering investment advice using algorithms that take into account the individual investor’s appetite for risk.

But it isn’t just about risk. There’s clear evidence that younger investors are looking for an ‘holistic’ approach to investing. One that takes account of their goals, whether it’s to buy a property or build funds for an early retirement.

This is only part of the picture. Younger investors are open to receiving financial coaching to help them make better investment decisions themselves. This is something that traditional financial advisors are very good at providing and which is very hard to provide in an automated fashion.

Traditional advice

Of course, software for IFAs can provide things like performance reports that automated advice bots are also good at. For younger investors though there’s more to it than just the numbers. Many of them are interested in building their financial literacy.

Intelliflo provide software for IFAs which can help advisors to stay in touch with their clients and provide the information they need to manage their portfolios. But this doesn’t do away with the need for a personal touch.

For all their faith in technology, younger generations actually place a lot of importance on human contact. Combine this with the fact that they face perhaps greater financial challenges compared to earlier generations – student debt, high property prices – and while automation is important, there’s still a key role for traditional financial advisors too. What younger investors need is a combination of automated systems, backed by traditional face-to-face advice that is tailored to suit the needs of the individual investor.

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