Who can you trust for help with your money?
Part 2 of financial secrets for thirty-somethings
In this second of three Insights to help thirty and forty-somethings plan their money, we briefly explore the question of who you can trust for help.
I say briefly because there’s enough in this question to write a very good book 😉
The Financial advice gap
You’d like to think you could just have a chat with a financial adviser about planning your money – but that’s not always easy to do.
First, there are far fewer financial advisers around than there were in the past. And second, they’re not all keen to offer education and guidance alone.
The leading fund manager, Schroder’s, revealed (in 2017) that about half of all UK financial advisers turn away potential clients where they have less than £50,000 to invest.
If you have more than £50,000, you’re more likely to get more attention. However, you might still struggle to find high-quality investment advice unless you have several times that amount to invest.
In fairness, a lot of advisers will give up some time for educational work if asked. You just need to know who to ask because some are better educators than others!
Also, if a friend or family member (e.g. your parents) have an adviser, you might be able to access some guidance at little or no cost. So, you could try that if that’s your situation provided you’re okay with having the same adviser as your parents.
The key, if you’re going to take personal financial guidance or advice, is to find someone knowledgeable and competent to help you through a planning process – at a reasonable cost.
There are such people, but they’re in very short supply.
The APPs filling Gaps
So, we have a big gap in the supply of solid, plain English (and plain speaking) financial education, as highlighted by Niamh’s plea for help that I mentioned in the first post in this series.
That’s the one that went viral on LinkedIn. See here
And, not surprisingly, as noted by Ioana Bain in the Financial Times article (15 March 2019) Where Millennials turn for financial advice, increasing numbers of ‘millennials’ (born in the 1980s and ’90s) now turn to online Apps for money guidance.
Is this the best place to start?
No, I really don’t think so.
Sure, you can access lots of financial products from the money store type APPs … and that’s how they make their money, I guess, but more choice is not always a good thing …
… if you simply need some bread and water, it doesn’t help to be offered 20 different brands of coffee, does it? 😉
Clearly, there’s a RISK of people thinking that because a particular financial product is listed on an APP, it must be something worth considering. And that’s not always the case.
Some APPs promote an overwhelming array of investment products and services including cryptocurrency platforms… and according to that FT article, it’s the crypto stuff that’s dominating young user’s interest.
You can read my thoughts on the Bitcoin silliness right here
That article needs a refresh (I updated it more than 6 times – as the Bitcoin price crashed) but the key messages there remain solid.
A NEW way to tackle this
We know, from excellent research by Nudge Global that people want financial education that’s separated from financial product sales.
So, think carefully about who you consult on money matters. A good starting point is to ask yourself whether the person (or APP) you’re consulting is paid for giving you 100% unbiased guidance … or does he/she/it earn their money by selling you financial products – or getting you to ‘link’ on same?
A great many people do not need more financial products, not immediately anyway. What they need is education and guidance around planning.
You’ll find a short video, and some notes, on why financial products are the last thing you need here
It’s not a new idea to separate financial education and guidance from product selling/advice services. Indeed, the best advisers take this approach in their work.
However, it’s only now really catching on. So, you’re getting ahead of the pack in reading this, and if you share it, you’ll help to get a very valuable new dance started
Can you ask friends, or others on Social Media?
Well, yes, of course, and this is a very popular way to seek guidance these days and, as we learned from the comments on Niamh’s post, you can always rely on finding people who want to help you.
Whether they can help, at all, is quite another matter but that won’t stop a great many from trying … regardless of their knowledge or qualifications in personal finance 😉
It’s in our human nature, we’re really not as selfish as many people think … we’re programmed to want to help others, the science tells us so.
Of course, it seemed nice to see so many people trying to help Niamh in the LinkedIn post but I was genuinely concerned by a lot of the specific advice being given in the comments.
I’m sure that (most of) the recommendations (for books, videos, blogs and even specific investment strategies) were sent with good intentions … but not much of it was helpful at all 🙁
OK, but what about FREE seminars?
Well, the big challenge for Niamh, and everyone else is to sort out the wheat from the snake oil in all the ‘FREE’ advice that’s out there.
And there really are a lot of dangerously misleading seminars available if you’re searching for that sort of thing.
Conclusion: Start with education
The thing about investing is it’s a long game – a multiyear game.
So, there’s never any rush to jump into something today. And you should run a mile from anyone who suggests there is.
What’s right for your money, might be very different to what’s right for your friend – and also different to what worked well for your parents. (Property, for example, has enjoyed (past tense) a very good run. More on that here
What most financial writers forget is that each of us is unique… in a whole host of ways.
So, in the next Insight, you’ll see how your ‘uniqueness’ matters when you’re planning your money…
… and how a good financial plan connects your money to what you want in your life.
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I hope to see you back here again soon
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