Tim Sargisson: Forget millennials, we can’t even engage our target audience
While the conversation around engaging millennials becomes ever louder, Tim Sargisson believes advisers should do better at marketing to their primary audience before trying their hand at a younger demographic
As advisers we are frequently reminded about how we fail to engage with millennials. Seemingly blind to the fact that this group stand to inherit £5.5trn from baby-boomers over the next 30 years, according to Centre for Economics and Business Research.
No doubt legions of IFAs take comfort from the fact that this is not an issue because there are plenty of well-heeled clients with gilded portfolios who are happy to pay a fee to an adviser commensurate with the costs of advice.
Then along comes Sanlam UK with its own research that shows that older generations are the least likely to speak to a financial adviser about managing their finances. Half of the respondents over 65 had never taken any financial advice, with 57% saying this is because they can do it on their own, relying on their own instincts.
I understand the bit about millennials and financial advice. That £5.5trn is a long way off and I am sure many advisers believe they will be long retired by the time the money trickles down and, with it, the need for advice.
The suited and booted adviser feels at odds with the millennial and their world and so we console ourselves, for now, with the knowledge that 3 + 1% of not very much is not very much.
It is worth pointing out that this is a somewhat blinkered approach. What better way to add value to your business than by having clients on your books who are going to be around for many years to come, rather than clients who are closer to being sans teeth, sans eyes, sans taste, sans everything, as Shakespeare put it.
‘Lack of effective marketing’
I also appreciate that a quarter of inheritance beneficiaries are not interested in sticking with their parent’s IFA, typically taking £288,000 with them. This is according to a piece of research by Kings Court Trust, which points to a growing confidence that younger people can manage money for themselves, because, of course, there is an app for that.
So if advisers choose to swerve millennials and focus on the baby boomers then what are we seeing when Sanlam UK tell us that half of our target audience over 65 have never taken any financial advice?
I believe the answer as to why we are seeing this lack of engagement is simple and comes down to a lack of effective marketing by the advice community. That, coupled with the drip feed of negative publicity in the mainstream press over matters such as inappropriate DB transfers, Woodford’s failings, questions over charges for advice, and being carpet bombed by the broadsheets over cruises and cufflinks.
It is no real surprise that people prefer to cross their fingers and hope, rather than seek out somebody who can put together a plan to stop them running out of money in their dotage. Let’s face it: marketing is hard and there are 101 other things that demand our attention. There are multiple approaches to marketing and every expert has a view about which is best.
However, the one thing all agree on is the need for cash to support the process, the more the better. According to the FCA 90% of adviser firms have average pre-tax profits of £200k, which does not leave much to splash out on a shiny new marketing campaign.
Far better to rely on the tried and trusted referral approach to secure new business. The solution could rest with the trade bodies putting together a media campaign to highlight the benefit of financial advice.
Instead of trying to prevent access to the Financial Services Compensation Scheme for those naïve DIY investors in London Capital and Finance mini-bonds, how about spending the time and resource on better educating the DIY investor as to the protections available through advice with FSCS, the ombudsman and professional indemnity insurance? That is before we start on Sanlam’s findings that show the positive benefit of advice:
- Advised clients are twice as confident about being able to retire how and when they want to,
- More than a quarter of advised clients have set a target income for their retirement, compared to 19% of non-advised people.
- Two-thirds of people with advisers have allocated and already passed on money for their dependents. This compared to 40& for people without an adviser.
The value of financial advice is clear for all to see. If only we were as good at marketing our services.
Published 8th November 2019