Getting financial advice sooner

ADVISOR: YOUTH TAKING INTEREST IN THEIR FINANCES

The reality is that anybody relates more easily talking to someone who is like them.

The financial advice industry has battled a perception problem for years. There is a broad feeling that financial advisors should be avoided, and used only when it becomes absolutely necessary.

The result is that many people speak to a financial advisor for the first time when they are nearing retirement. This is when they find the prospect of having to sort out their financial future.

However, a recent study by Liberty suggests that many South Africans are actually getting advice sooner. The analysis, conducted by Columinate, found that of those who currently have financial advisors, 60% formed the relationship before the age of 35. Another 25% got their financial advisor before they turned 45.

This is a remarkable finding as it contradicts expectations.

One might argue that it’s unlikely to be properly representative of the whole population. The survey was conducted entirely online and only included banked consumers who earn at least R20 000 per month, so it captured a particular demographic.

On the other hand, it is still noteworthy that such a large portion of respondents of any survey reported that they first got advice at a relatively young age. What is telling is that, according to Jay Naidoo, divisional director for distribution transformation at Liberty, this mirrors their experience within the business.

“There is a shift taking place,” says Naidoo. “We are seeing it in terms of our client numbers. We are seeing a shift of younger, black clients coming onto Liberty books, when previously it was older, white clients.”

She argues that younger generations do have a different mindset when it comes to money. “I think definitely there is a greater consciousness among younger people. They recognise that they are earning decent salaries, they have opportunities, so how do they start creating wealth?

“I wouldn’t be surprised if those younger people entering the job market want to engage a lot sooner. There is a huge amount of curiosity in this group.”

What is almost certainly supporting this trend is that the financial advice industry is going through a demographic shift of its own.

Carlo Gil, a financial advisor at Liberty, has seen this in his own branch. “Just a few years ago, 95% of us were men. Now we are at 5050. We are also seeing younger advisors joining us.” Gil believes this is having an observable impact. The reality is that anybody relates more easily and feels more comfortable talking to someone who is like them. Younger advisors are attracting a younger client base.

The same is true of the growing number of black advisors. They are engaging more with black clients.

Naidoo says: “There are a lot of young graduates who have joined Liberty, and they have brought a different way of working and networking.”

This is matching with a demand that Naidoo believes is eager to be met. She sees younger generations taking a keen interest in their finances. “When you chat to them, they have an innate curiosity about what they can do, how they can build their wealth.

“They want to know more. They are hungry to learn about this industry.”

There is a huge amount of curiosity in youth