Following on from the release of its report looking into young investors’ future confidence, Invessed CEO and Founder Theo Paraskevopoulos spoke to Payment Expert on why there is growing concern regarding wealth management amongst young people today.
Paraskevopoulos emphasised an “urgent” need for financial advice among younger demographics, explaining the key reasons behind this necessity, and outlining how older generations can better support young investors in the UK.
Payment Expert: Firstly, Theo, what were some of your key takeaways from the ‘Defining Wealth for a New Generation’ research report?
Theo Paraskevopoulos: Younger investors urgently need financial advice, but they avoid it due to high fees and outdated practices, leaving many uncomfortable with investment principles and saving little to nothing. The wealth management industry must quickly adapt to provide affordable, modern solutions to empower this generation and secure their financial future.
From our report we found that 63% of female respondents are uncomfortable with basic investment principles, and 56% of younger investors avoid professional advice due to high fees and outdated practices. Plus, nearly half of them save little to nothing. This gap is alarming.
The alienation of a generation isn’t just a wake-up call—it’s an urgent demand for the industry to provide solutions that resonate with younger investors, empowering them to secure their financial future.
PE: What are the common pitfalls for young adults when it comes to simple investment understanding, such as saving income, entering the mortgage and bill landscape, and investing in assets/stock?
TP: Young adults are wary of fees and often choose value-aligned investments, leading many to choose self-investment platforms that often don’t meet their unique needs and may push them towards risky investments.
Without proper guidance, they risk having misaligned portfolios, highlighting the urgent need for accessible, tailored financial advice to help them achieve their financial goals.
PE: Are there external factors, such as the current economic climate, preventing young people from effectively planning and saving for their financial future?
TP: Young people often invest less and due to economic uncertainty and the cost-of-living crisis, this makes long-term planning daunting and more challenging.
Without affordable, modern financial advice, they risk delaying wealth-building and missing opportunities, underscoring the urgent need for accessible expert guidance to help them start planning effectively despite the challenges.
Many people who reach their 30s or 40s realise they’ve lost valuable time growing their investments. The economic climate makes it even more critical to access expert advice to help young people navigate these challenges, encouraging them to start planning and saving effectively despite the uncertainties.
Additionally, wealth management continues to be prohibitively expensive, catering predominantly to an elite clientele and employing outdated practices, which alienates younger investors.
PE: How readily available are financial literacy programmes/initiatives for young people? Is there room to widen accessibility and if so, how?
TP: In most European countries, financial literacy is inadequate, often leaving young people without the knowledge to make informed decisions.
Including financial literacy in school curriculums, focusing on practical guidelines and financial hygiene, can foster a healthy relationship with money, teaching the younger generation the importance of saving, investing, and knowing when to seek expert advice for lifelong financial confidence. It’s about creating a foundation for lifelong financial health and confidence.
PE: Who are some of the best financial institutions/services that are safeguarding young people from making bad financial decisions, and what benefits do they also bring to the table?
TP: The UK media covers personal finance well, raising awareness and educating young people about informed financial decisions.
However, shifting the narrative to view wealth as a means to a secure future and career freedom, supported by comprehensive financial education and accessible tools from financial institutions, can empower young people to achieve their life goals and dreams.
Financial institutions that embrace this perspective and offer comprehensive financial education, tailored advice, and accessible tools are doing the best job of safeguarding young people. They prevent bad financial decisions and empower young people to see wealth as a means to achieve their life goals and dreams.
This shift in narrative and support from financial services can help build a generation of savvy, confident investors.
PE: Besides young people, are older demographic groups also facing similar financial issues? Do they have the luxury to resolve this better than their younger counterparts?
TP: It would be great to see Wealth Management become more democratised. Using technology to cut costs and lower fees can attract the mass affluent market, who would benefit from professional advice. This way, younger and older generations can access the tools and guidance they need to secure their financial futures.
It’s about making smart financial advice accessible to everyone, not just the wealthy.
The financial industry mainly serves older, wealthier individuals, leaving those with smaller investments and younger investors with limited options. Democratising wealth management through technology to lower costs can provide both younger and older generations with the professional advice and guidance they need, making smart financial guidance accessible to everyone, not just the wealthy.
PE: Lastly, Theo, and thank you for your time, can you predict in five years time that, in the UK in particular, we will see better parameters in place for young people to prosper in the financial field, and will this be predominantly down to which government is in charge?
TP: As Baby Boomers pass on their wealth, the younger generation will naturally become more financially savvy, and the industry will adapt to their needs. Over the next few years, we advise companies to use the right technology to cater to this audience now.
Technology will play a huge role in this transition, but demographics are critical. While the government’s approach to an ageing population will be important, it’s about more than who is in charge politically. It’s about how well they support technological advancements and financial education.
At Invessed, we’re committed to leading this change by offering innovative, tech-driven financial solutions tailored to young investors, making financial advice accessible and affordable to help them secure their financial future.
