Gen Y wants more transparency from financial planners

Generation Y values expertise and transparency over price-based comparisons when it comes to selecting a financial adviser, according to a study conducted by online portal ProAdviser.

ProAdviser is an online tool that helps connect potential clients with financial planners, having launched around four months ago.

According to the survey of more than 120 consumers, mostly aged between the 22 and 29, the financial planning industry is not transparent enough, and young people don’t believe they’re getting a valuable service.

“The main thing I found, in asking what annoys them the most, a lot of people indicated a lack of transparency, that pricing is not very transparent,” says Nikhil Sreedhar, founder and chief executive officer of ProAdviser.

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Another key finding was that 80 per cent of those surveyed who were interested in accessing the expertise of a financial planner, had little idea how to go about finding someone suitable.

“I also found that experience and expertise is valued higher than the financial planning qualifications. “The location of the financial planner is not as relevant as expertise, qualifications or price, so Gen Y are happy to see someone that’s outside their location,” Sreedhar says.

He believes a likely cause of this could be a greater level of comfort with technology-mediated communication such as Skype and other online-based delivery methods.

Style over substance

Sreedhar says he has observed a number of trends through his own experience, having worked briefly in accounting, financial planning and broking.

“I saw that the whole way of getting advice is a bit messed up, for example, through an ad in the newspaper, clients will sign up, but don’t have an opportunity to compare whether the service was necessarily the best one for them.

“I thought there must be a reason, and I found it was purely because of the marketing [the firms] were doing. People just didn’t know how to find those other planners,” he says.

Too baby-faced

Despite having dipped his toe into the financial planning industry already, Sreedhar says he came up with the business plan for ProAdviser because at 22 years of age, by his own admission, he was still “too baby-faced”.

Sreedhar says he has ambitions of moving into private wealth advice in four or five years’ time, having already completed a Diploma in Financial Planning before working in the industry. But for now, it seems he will have plenty to keep him busy.

Beyond merely a simple website that lists financial planners in various locations across the country, it’s underpinned by an algorithm that Sreedhar developed personally.

Sreedhar explains that the service works by enabling consumers to go onto the website and type in their budget, location and other parameters.

“I’ve built an algorithm that allocates that client to the five most appropriate financial planners on the platform. Those planners have an opportunity to review that request and get in touch with them, and the client then can decide which one to go with,” he says, explaining it could be described as something like iSelect, but for professionals rather than health insurance providers.

According to Sreedhar, he carefully vets those financial planners who express an interest in his portal, judging whether “they prefer to just take home a commission, or want to actually help a client.” Only those who fall into the latter category make it onto the site.

Growth plans underway

Having launched ProAdviser.com.au just four months ago, Sreedhar says he’s had an excellent response from both financial planners and those looking to find a suitable financial planner.

But he found that users from the Generation Y demographic were notably absent from his customer base, and in the interests of appealing to as broad an audience as possible, conducted a small survey to try and find out why.

“Most of our traffic comes through via Facebook marketing, a lot of organic search marketing and blogging, with a core focus on content marketing, including a weekly updated blog, and not many are Gen Y – so I want to make it consistent across all generations,”  Sreedhar says.

ProAdviser currently has 70 financial planning partners, with 40 to 50 of these located in Sydney and Melbourne and the others spread between Adelaide, Perth, Hobart and Brisbane. Sreedhar aims to grow this number to more than 300 approved financial professionals by the end of the year.

Over this timeframe, he aims to connect one client with one individual financial planner per month. He also plans to expand into other areas of professional services, including accountants and lawyers, to grow it into what he terms a “professional advice marketplace”.