View more on these topics

Nic Cicutti: Why can’t advisers get it right with millennials?

It was naive to think advisers would focus efforts on the opportunities here. Instead, the robos have won

This column is all about naivety. Mine, if you must know. It is also to do with an article I was recently commissioned to write for a consumer finance magazine. I will start with that part of the story.

My commission was to write a piece on the options available for someone with a £100,000 pension lump sum.

As we know, increasing numbers of people are freeing up their money-purchase schemes and placing them into drawdown in order to access some or all of their tax-free cash.

In the process, they are also left with large pots of money they need to re-invest, in many cases for a significant number of years. If so, what might they do with that part of their savings?

Nic Cicutti: Start young to win the battle against pensions apathy

At the core of the article were the expert opinions of four of the industry’s finest: West Riding Personal Financial Solutions’ Neil Liversidge, Kohn Cougar’s Roddy Kohn, Tilney Group’s Jason Hollands and Shore Financial Planning’s Ben Yearsley.

What I also tried to do in the article was to identify options other than independent financial advice that potential punters might consider when making a decision about reinvesting their remaining lump sum. Among those options I looked at robo offerings, as well as typical fund platforms like Hargreaves Lansdown, iWeb, Fidelity, Alliance Trust and Halifax Share Dealing.

So far, so good. Now let’s talk about my naivety. Long-term readers of this column have often accused me of being an innocent abroad in my comments about the financial services industry. If so, my naivety goes back a very long way.

Back in the early 1990s, when I began my association with Money Marketing, I was initially so in awe of what financial advisers did that I simply could not understand why the vast majority of the UK population did not seek out their services right away.

I could see that most advisers’ clients were in an older and more prosperous category in terms of household incomes.

Nevertheless, I had a theory that, over time, this demographic would gradually become transformed and a younger generation of initially cash-strapped but intelligent consumers would grow to see the benefits of independent financial advice. They would inevitably gravitate towards advisers in increasing numbers.

Nic Cicutti: Advisers must face fact clients still don’t trust them

I allowed myself to believe that, while a few advisers would not want to have less well-off clients on their books, most others would welcome the opportunity to nurture a generation of 20- and 30-somethings like me, until we all became as financially affluent as their existing clients.

I guess this confession really does mark me out as one hell of a gullible idiot.

In fairness, I have met advisers in the years since then who have done exactly what I just described. There are many who took on a mentoring role with their younger clients, who have benefited financially as a result. The four advisers I contacted for the consumer finance magazine piece are, to their credit, among those who have done just that.

But for my naive vision of the future of advice to really lay down deep roots would have required a business model which accepted that most young clients do not have the financial wherewithal to pay upfront for advisers’ services right now.

Take my two nephews, for example. Both 20-somethings, they work hard and play hard. They have a sensible attitude to money and are willing to consider saving some of it for their retirement (which I consider to be amazing as I never had that much common sense at their age).

At the same time, things need to be made simple for them, as they have neither the time or the commitment to worry about a mass of self-investment options, extensive paperwork and complex price or performance comparisons. They simply cannot be bothered with any of that.

How advisers are reaching out to younger clients

They also engage differently with technology, as well as with human beings. The willingness to sit down in front of someone and be lectured about money is nil. Their willingness to spend half an hour in front of a computer and make decisions on the basis of online advice is much, much greater.

I asked them to take a look at some robo-advice websites like Nutmeg, Moneyfarm and Scalable Capital, as well as a few advisers’ sites and fund platforms, and come back to me with their thoughts. The verdict was massively in favour of robo-advice. In fact, they were raving about their experience on those websites.

Why? The way they could determine their risk levels in minutes, the fact that they could make choices instantly, that once made someone would look after their money and rebalance automatically to reflect changes in investment conditions. In other words, once a decision is made they could forget about it and move on to the next thing.

As I said, I was naive back then. And maybe I am still naive now. But my experience of asking two 20-somethings to test-pilot a few websites tells me that there is something missing in the current financial advice proposition to that age group.

What is the industry doing wrong?

Nic Cicutti can be contacted at Follow him on Twitter @NicCicutti



A third of millennials could still be renting in retirement

A third of millennials could be forced to rent in retirement, according to a report from the Resolution Foundation thinktank. Up to half of that generation could also be renting into their 40s, and around 40 per cent are renting at the age of 30. A Resolution Foundation statement says: “Our estimates suggest that if […]


Scott Gallacher: Targeting millennials is a wasted effort

My fellow advisers and other industry experts often speak about a pressing need for us to engage with “millennials” (roughly speaking, the generation of 18- to 35-year-olds). However, I take a completely opposite view. I am not saying some millennials would not benefit from our advice, but in terms of our own businesses, actively targeting […]


How much are advisers charging for pension transfers?

Defined benefit pension transfer charges are being put under the microscope again as the regulator turns over more potential conflicts of interest. With the British Steel Pension Scheme the latest to dominate headlines and the FCA ready to interrogate further as it extends its review to include all firms authorised to give pension transfer advice, […]

Singapore cover image - thumbnail

White paper — Singapore International Insights

Jelf Employee Benefits assesses key trends within the international private medical insurance provision of organisations with employees in Singapore. Benefit structure, cost management and healthcare facilities are examined and key considerations are highlighted. This edition will be of particular interest to global human resource directors and benefit managers with local and expatriate populations in Singapore.


News and expert analysis straight to your inbox

Sign up


There are 9 comments at the moment, we would love to hear your opinion too.

  1. John Hutton-Attenborough 6th June 2018 at 11:23 am

    My son is 25 and has just completed a degree in education. In his bedroom he has a laptop/ telly/ smartphone and smartpad pretty much going full blast most of the time. It is clear that if he wants to know something he will get it electronically. Bank statements remain unopened. Paper invitations to engage (AA etc) are discarded similarly. Robo advice will be the way forward for him and his generation and I have no problem with that as long as it is properly regulated and he can pick his way through the minefield of scam artists. Hopefully that may be were my grey hair and experience may be helpful if of course I am ever asked!

  2. Nic

    I fear you are looking at the broad picture – the average. I believe that millennials – even if they are currently a bit skint – are being serviced – PROVIDED that it can be see that they have prospects.

    Youngsters whose parents are well off are often referred by those parents. A short phone conversation will soo establish the sutability of a prospective millennial client:

    1. What degree do you have?
    2. Which University?
    3. What is your current job?
    4.How much do you earn?
    5. How big is your student debt.
    6. Married, single or with partner?
    7. Current accommodation and cost?

    And perhaps a few more along this vein will soon establish whether the person is worth taking on.

    I had a fair few. Yes, well off parents, but also those who worked in the city or the professions. Lawyers, accountants and dentists.

    What I (and I suspect others ) were not interested in were Burger flippers and Macramé knitters.(If you follow the analogies).

  3. Financial advisers are often described as being risk averse and many firms, it has been reported, operate on very thin margins. Most are under-resourced and, as a result, probably quickly discount the idea of investing time and money in developing a low-cost digital division that would appeal to Millennials.

    Incubating young clients through a digital service would seem to be a pretty sensible idea for a forward-looking firm. It might even be a way to re-engage with all of those orphan clients.

  4. Nutmeg: £9.3 million loss on turnover of £2.5 million

    Scalable Capital: £950k loss on turnover of basically nil

    Moneyfarm: £6.4 million loss on turnover of £168k

    I think Cicutti must have written this article upside down. The question is not what are IFAs (mostly profitable and sustainable businesses) doing wrong. The question is what are robo-sales firms doing wrong, and what can they learn from IFAs that would stop them haemmorhaging money?

    How much did Cicutti’s nephews decide to invest?

  5. Nothing wrong, perhaps the focus of the question is a little fuzzy.

    There’s a difference between those contemplating an investment of £100 per month or £30,000 lump sum and those with £150,000 or more wondering what to do with it. In the former case it’s relatively easy to make that on-line leap. When you have significant money to invest I’m guessing you’re going to want to do more than 30 minute Google and a button push.

    By and large it’s not economical (for client or adviser) in the current regulatory environment to service clients with smaller amounts unless you can scale with the likes of robo, though no one has managed to do it profitably yet.

    Assuming I’m correct, in practice you would see small amounts being invested with robos and larger amounts being invested via advisers.

    So what is the average amount invested via a robo compared to an adviser? I’m sure a 30 minute Google would provide the answer Nic…

  6. Christopher Petrie 6th June 2018 at 12:58 pm

    Your nephews will already be saving for retirement through their workplace pension scheme.

    One presumes if they want to add a bit more they would instinctively ask their boss or HR department how to go about it. Bigger firms would have an IFA to help, smaller ones more likely to refer their employees directly to the pension provider.

    I’m cannot see why they would seek out robo-advice as they probably haven’t even heard of such a thing.

  7. Like most online options longer term I can see it as being the way forward for the majority of smaller pots. Regulation and market change has made face to face advice if not for the rich then for the older and better off).

    However, it does seem difficult to monetise it significantly as Sascha Klauss has pointed out so it may be only when there is a critical mass that someone will make a little cash.

    There is significant resistance by the younger generation to pay for anything which seems to be available on line for “free” particularly when they cannot themselves understand the difference between one fund choice or another and why one outperforms in certain circumstances and not others.

    However, in this case the adage “when something online is free you’re not the customer you’re the product was never so true”.

  8. Interestingly timed article, given that the FCA have recently commented on the problems (as they see it) with various robo advice models I think?
    Given that you don’t know what you don’t know, perhaps the millennials mentioned were excited by an online process rather than the end outcome?
    If I need something REALLY important done well, then Id focus on the quality of the outcome more than how easy/cheap it is to do it.
    And fwiw I still think the answer to providing advice to the mass market (i.e. when paying fully regulated advice fees isn’t justifiable) is to simply de-regulate such “advice” IF the fee earned (by a regulated advice firm) is less than e.g. £250-300. That way, IF we wanted to offer that business model (some will), it could work like a (one hour?) GP surgery appointment (minus the waiting time!!) and add some real value to the client (providing both generic and specific suggestions) but still be profitable to the firm. Obviously not a perfect solution (nothing is!), but it would offer an extra choice and bridge the so-called advice gap massively.

  9. Robo advice will be the domain of the banks, as financial advice firms (well most) cannot create a cross subsidy to enable the process to be sustainable in its early years (and beyond probably).

    Nic’s observation about his nephews’ inability to concentrate and focus (probably on anything other than the shiny stuff that interests them, or as it’s now called ‘being too busy’), says a lot about millennialis and the computer age as a whole, as I often find in
    my daily dealings with some staff at product providers!

Leave a comment