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 them may simply be an unnecessary distraction.
For success, both client and adviser must get value from the relationship – and that is much more difficult with younger people, who normally have much less money.
Various regulations over the years have exacerbated the profitability problem. For example, the RDR, while welcome, saw the improvements in qualifications and servicing requirements again make it a little more expensive to deliver advice.
Of course, I am assuming a more-or-less traditional model. I acknowledge that, for any adviser managing to crack the “mass market conundrum”, untold riches may await.
However, better-resourced foes (banks and product providers) have been trying and failing for years: witness the various robo-advisers simply burning money at an alarming rate. I respect those who make the effort, but if the big boys cannot make it work, I doubt it is a realistic business for my typical peers.
This month, I came across two statistics that I would argue support my view that there is no need to target millennials.
The first was that there are 3.6 million British households with wealth of more than £1m, according to the Office for National Statistics.
The second was from BBC Radio 4 Moneybox presenter and Money Marketing columnist Paul Lewis, who has managed to get some definitive adviser numbers from the FCA. Apparently, there are 34,724 people advising on retail investments, of whom 25,951 are financial advisers.
These two statistics have an almost beautiful symmetry: for each person advising on retail investments, there are just over 100 households with more than £1m in wealth.
This fits perfectly with the oft-quoted view that 100 to 150 clients per adviser is the optimal number (an idea for which there is some anthropological support, tying in with the Dunbar number, which suggests 150 is the number of individuals any one person can maintain a social relationship with).
It also shows something that most advisers already know: we are not really in competition with each other, as there are more than enough high-quality clients to go around.
Now, I acknowledge my argument is somewhat self-centred and I agree that in a modern, developed country there probably should be a way for the young and the mass market to access good financial advice.
But, to be honest, I think the advice gap is a task for the Government and for the FCA. I will certainly lend my voice in support, but I am also busy running a business, supporting my own mortgage and also those of our staff and their families.
Of course, we do engage with millennials to some extent – mostly the children of established clients – and we are also alive to the need to gradually replace what would otherwise be an ageing client bank.
But as there is a shortage of advisers, it seems likely that as the years roll on and wealth builds that there will be no shortage of millennials actively seeking us out — even more than their parents’ generation did.
Scott Gallacher is director of Rowley Turton