Lack of financial education is leading people to feel they have 'no control' over their money
- Half of young people feel that they have no control over their finances
- Invessed founder Theo Paraskevopolous says firms can cater to the less wealthy
Half of young adults say they have little or no control over their financial situation, according to research from a wealth tech start-up.
And while 47 per cent of all adults under 60 save or invest little to none of their income, the problem is not entirely down to a lack of enthusiasm or interest, the founder of Invessed claims
Theo Paraskevopoulos says young people of 2024 are no different to their parents 30 years ago - despite more information available at our fingertips - and that's because of a lack of financial education from a young age.
Knowledge gap: Theo Paraskevopoulos says a lack of financial education is holding young people back from investing
He said: 'There's very little financial literacy to do at school, whether it is in the UK or not… people benefit by becoming engaged at a younger age.'
'Our own experiences with money and investments are shaped by how we talk about money at home and in our communities.
'If you've got a family and you talk openly about money, budgets and pocket money, it's going to be the easier for your kids to become aware of it and comfortable with it as they grow older.'
Share this article
Invessed, which provides an online platform for wealth management firms, says the need for younger generations to engage with investing is particularly pressing, as it expects there to be a wealth transfer of $84 trillion from the baby boomer generation.
It found that 42 per cent of younger investors are uncomfortable with the basic principles of investing.
Theo Paraskevopoulos adds: 'Over time as you enter the system, you'll get more and more familiar, to buy a house you have to stick to budget.
'As the complexity of your life increases, you will get more familiar with managing your money.'
Younger people tend to have less spare money to direct towards savings and investments.
However, Theo believes it is more important than ever that people begin to engage with saving and investing at a younger age.
Despite the importance of understanding your financial situation, there appears to be a disconnect between young people and financial services.
In many cases, this comes in the form of a lack of engagement.
However, the problem also lies with wealth managers, Paraskevopoulos told This is Money, highlighting 'a disconnect between how the industry sees the clients and how the clients can have seen wealth management.'
Wealth managers need to engage clients with a narrative that allows them to understand their financial situation and see how it can be developed.
'Don't just throw data and reports to your clients. Give them something to hold on to, a hook,' he said, 'people will engage if we adapt.'
Wealth managers would still need platforms for high net-worth clients, Paraskevopoulos noted, but argues that with digital technology and especially AI, 'wealth managers have the tools to scale their services, so they can also create packages with smaller fees for entry-level investors, people that are just starting out who are normally forced to go into the DIY services.'
'Why alienate younger investors?' he said.
Of course, many people are under the impression that investing and professional financial advice are not for them, but are instead for the super-wealthy.
But there is no minimum benchmark for investing for the future, according to Paraskevopoulos.
'Obviously, you should first of all save for a rainy day, or big ticket items,' Paraskevopoulos said, 'once you have covered the basics, you should invest.'
The Invessed survey of more than 2,000 people found that 56 per cent of respondents avoid professional advice due to the high fees involved or because of outdated practices, meaning that in many cases these young people feel that there is a boundary between them and people who seek professional financial help.
What financial lessons would you pass to your younger self? Get in touch: [email protected]
DIY INVESTING PLATFORMS
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you
