Dante De Gori

Generation Y individuals are increasingly engaged with their finances and open to the benefits of financial planning, according to a global research report by the Financial Planning Standards Board.

The report, ‘FPSB Value of Financial Planning Research 2023’, reveals that two out of every three Gen Y individuals who are not currently working with a financial planner would consider paying for advice.

This willingness to seek professional guidance sets them apart from older generations, with 60 per cent of Gen X individuals and 50 per cent of Baby Boomers expressing a similar interest.

“They are [also] looking to engage a financial planner soon,” the report says.

Half of those considering it intend to do so in less than three years, and over 30 per cent plan to engage with financial planners within the next three to 10 years.

Gen Y individuals also have different priorities compared to older generations, the report says.

“[They] are more likely to identify mental health, family life, work satisfaction, social life, and physical health as aspects of their life that could benefit from receiving financial planning,” it says.

Additionally, 60 per cent of Gen Y individuals still prefer face-to-face interactions with advisers; however, they are significantly more inclined to use apps or websites to manage their finances compared to older generations.

Some 40 per cent of Gen Y individuals use digital finance tools such as apps for budgeting, while only 33 per cent of Baby Boomers do so.

AMP managing director of advice Matt Lawler said at Striver’s inaugural Brimstone event in September that digital finance tools will co-exist with human advisers in a hybrid model.

“There are great digital tools and technology available that allow you to perform calculations and gain an overview, but you will get to a point where the complexity means that you need to get a human involved,” he said.

Research from AMP and KMPG released earlier this year found interest in digital advice is at its peak, but consumer take-up has still been underwhelming.

Gen Y’s readiness to engage with financial planning suggests a growing awareness of the importance of managing their money.

“Now established income earners, Gen Y are on the verge of receiving unprecedented levels of intergenerational wealth via inheritance or gifts,” the FPSB report says.

More than half of Gen Y individuals have either already received or are likely to receive an inheritance or major financial support. Close to 40 per cent of them expect to inherit wealth within the next five years, with almost two and five expecting are likely to receive financial support of over US$250,000 (AUD$391,050).

Research for the report was undertaken by independent research firm MYMAVINS, which surveyed 15,332 individuals aged over 25 across 15 different regions (Australia, Canada, Chinese Taipei, Hong Kong, India, Ireland, Malaysia, the Netherlands, New Zealand, China, the Republic of Korea, Singapore, South Africa, the United Kingdom, and the United States), with annual incomes over US$60,000 ($95,008) or investable assets exceeding US$35,000 ($55,421).

“The findings in this global study illuminate a compelling reality: the immense value that CFP professionals bring in supporting clients’ financial needs amid times of uncertainty, reinforcing the reputation of CFP certification as the global symbol of excellence in financial planning,” FPSB CEO Dante De Gori said in a media release on Wednesday.

Gen Y vs. Boomers 

Nearly 3 in 10 Gen Y individuals would consider direct investing, according to the report.

“[This suggests] a greater propensity for this than Baby Boomers (one in four),” it says.

Additionally, 81 per cent of Gen Y clients prefer to invest in companies that have a purpose beyond profits, surpassing the 76 per cent preference among Baby Boomer clients.

More than 40 per cent of Gen Y clients also expect access to an online portal as part of their financial planning service. Less than 33 per cent of Baby Boomer clients share this expectation.

Crypto investing is popular among Gen Y individuals, as well. Some 30 per cent of them currently hold some crypto assets, and over 25 per cent are considering it. In contrast, most Baby Boomers are uninterested in cryptocurrency investments.

Join the discussion