Many IFA clients, like IFAs themselves, tend to be at a later and more prosperous time in their lives than the general population.
It tends to be the baby boomers and the better off among the retired who seek advice. This is understandable in that IFAs have the greatest scope to make a decent living by advising people with the most assets and certainly, the most affluent have the greatest need for advice on protecting assets, securing a retirement income and planning how to maximise what they will leave to the next generation.
However, the flipside is that many IFAs are not servicing the younger generation. I am not convinced of the wisdom of advisers or providers in writing off this group as unprofitable or at least not very profitable. Nor do I think it is safe to assume that simply because they use Facebook and Twitter, this generation will self-select when it comes to financial services. Perhaps with a little imagination we could find ways to reach this group cost-effectively.
Apart from anything else, it would be a good thing for society at large. The more people who have financial services products, the more resilient society is when faced with the sort of economic shocks that we have seen.
You would think the financial industry would want to grow with its clients and be on the lookout for the next generation of clients.
Some advisers do take an holistic intergenerational approach but it tends to be at the top end of the income and capital spectrum. Inheritance planning over one or even two generations is becoming increasingly important among financial planners.
In other areas the picture is not so good. Everyone knows that the earlier you start saving and investing a pension, the cheaper it becomes to generate enough of a pot to secure a decent retirement income later in life.
However, because of all manner of regulatory and business developments, the advice industry has become less adept at reaching people at an earlier age.
And what of protection? Could and should we be reaching out to younger generations?
A quick survey of the cost of taking out income protection in your 20s, 30s, 40s and 50s suggests that those seeking cover earlier may get a better lifetime deal, just as with a pension.
The fact that the younger you take out cover the more cost-effective it becomes, may mean the industry is missing a trick.
The primary objective of any adviser should be to cover the main earners within a family but why should the protection industry not consider also covering younger generations at a cheaper cost? It feels like a wasted opportunity.
I suggest that insurers, providers and advisers consider extending cover of the main breadwinner against death or illness to others in the family besides just the spouse. For example, is it not possible to develop a sort of intergenerational joint-life policy or even car insurance that lets the whole family drive the car although there would still be one primary driver insured?
Would it be possible for a small additional or separate premium or premiums to extend cheaper cover across the family?
The underwriting at such an early age should not be too onerous. Insuring their income might even stop the sons and daughters of the baby boomers becoming what are now popularly known as baby boom-erangers, the 20 or 30-somethings who leave home only to have to move back.
The plans could also include some element of a menu structure to allow the cover to be varied at later significant dates.
I am not saying there are not challenges in all this. It would have to represent value for money – lifetime value for money might be a better way of putting it.
There would be a need for some sort of regulatory clearance on suitability and it would not be appropriate for all families but it could establish the insurance habit at an early age, which can only be a good thing for all concerned.
As a society and as individuals we face a huge challenges. Getting more than one or two generations to understand protection and to consider covering themselves may well be the sort of innovation the financial services industry should be considering in this rapidly changing world.