Ellen Davis-Walker

Re-generating finance with the next generation

Thirty years in financial services is a long time, a bigger number than the ages of many of my most respected colleagues. The older my career gets however, the keener I am to interact with and cater for younger people, particularly those who have had less birthdays than I have had work anniversaries!

For the last few years, I’ve dedicated my work increasingly to advocating sustainable investment, which in the context of this article refers to long term investment in companies whose products, services and culture aim in some way to mitigate the major problems that humankind is faced with.

You might ask how relevant investment is for young people, many of whom will be repaying student debt, saving for a mortgage and/or struggling with high rents. Typically, young people are not the investors that we encounter day to day in the financial advice profession. They are often however, the people for whom the money is invested.

They reap what we sow

When it comes to investing sustainably, its clear that younger people are likely to reap greater benefit over time from any positive social and environmental outcomes that an investment might generate. Conversely, they are also more likely to suffer if we fail to limit rising temperatures, sea levels, pollution, social instability and nature loss.  This is not because these are future problems, they very much affect people of all ages and nationalities today.   Unless we act to address them however, they will become increasingly serious, reducing quality of life and life choices in years when young people should be maturing and prospering.

The hard reality is that, not only is the seriousness of the situation is growing, the window of opportunity to tackle the problem is ever shrinking.   By the time young people have greater hold on the reins of capital and finance, it will be too late to make the urgent changes required to ensure a sustainable economic and social system and a planet on which we can all survive and thrive.

Common ground

I first started working with private investors in the late 90’s, when I was entering my thirties and a Mum of one.  It wasn’t easy winning the confidence of clients who were 30 years older than me and expecting to receive advice from a man with grey hair and a BMW. I tended to talk about the benefits of saving for the next generation a lot, my small child and their grandchildren being our main common ground.

Building a legacy for children and grandchildren is one of the most consistent aims that older investors have. Advisers are tasked with finding ways of passing money on tax efficiently and methods that ensure that young Jack and Jessica don’t “blow the money” irresponsibly.

It could really make a difference if we factored in:

1. how to pass the wealth on not just tax efficiently but also carbon efficiently and
2. how to avoid irresponsible investing, as well as irresponsible spending.

A gift without giving

Advisers also help their clients decide whether they can afford to gift money to their family, without putting their own financial security at risk.  Where the investor needs to retain their money for their personal needs, perhaps to provide retirement income or pay for elderly care, a gift can still be indirectly given to younger generations. By holding companies whose goods, services and behaviours generate a positive long term environmental and/or social benefit, the investment potentially pays it forward, as well as providing a financial return.

A new wave of investors

Whilst young people may not be the big investors now, the financial services industry has been keeping an eye out for their imminent arrival over the years to come, anticipating the days when they inherit from the Gen Z’s and the Baby Boomers.

Not all those who inherit will seek financial advice, as there are options and trends available to them that their parents and grandparents would never have considered – think cryptocurrency and investing via a  mobile phone app.  Those young people who do engage with personal financial advice and planning are likely to make some waves.  They will be far more comfortable with digital solutions and more ready to ask why we do things a certain way in the world of finance.  A service that educates and empowers them will be attractive, over one that simply tells them that this is the way things are done.

Whilst recent consumer surveys contest the view that older generations are less interested in sustainable investing, younger people are more likely to seek to align their money with their personal values, to express what these are and to react more strongly to investments that do not fit with their moral compass or beliefs.

The forward-thinking personal finance firms will be thinking ahead about whether their current products and services, their marketing, even the language they use will make younger generations feel at ease and want to engage.

Meant to be a mentor

Until I found my fascination for sustainable finance, I was working as a manager in a broader financial planning role. One of the more enjoyable aspects of that job was the chance to act as a mentor for graduates, who were relatively new to financial services and looking to develop and progress.

It was rewarding to see them progress rapidly either into a client-facing advice role or a skilled technical support function.  I also greatly appreciated the ability to witness how they set out to make their mark and to learn from the mentoring at times, as well as teach. The phrase “there’s no i in team” is used a lot in the office, but there is an e-a-m for “every age matters!”

The future of finance

A few weeks back, the 2050 climate group offered some fellow sustainable finance advocates and I the chance to present to an audience of under thirties about sustainable investing and the direction of travel for sustainable finance.  We covered the ghosts of finance past, big commissions, pension mis-selling, the credit crunch (ouch, ouch and ouch again). We highlighted the pioneers of the present, some of them young people themselves (such as Georgia Stewart and her team at Tumelo Bring investing to life | Tumelo | Bring investing to life). Our final slide was an appeal to the audience to come and engage with the world of finance, to modernise, energise and reshape it, whether as investors or as workers.  We pointed out that increasingly there is opportunity for them to use their voices, both directly and via their money.   We called on them to ask the right questions and to expect high standards.

There was a lot of energy in the Zoom room for that final 33slide and apparently “we made finance interesting for the first time ever”.

I would re-iterate that invitation to young people to come and pick up the baton and invigorate the industry. No need to hang around for 30 odd years like I have, but bring your ideas and skills and a little positive disruption. The industry doesn’t just need mathematicians and economists, it needs great communicators, thinkers, designers, psychologists, marketing and IT professionals.

The finance industry has both a huge responsibility and opportunity to make a positive impact on the environment and society by directing where the money goes appropriately.  We should not overlook the fact that it is ripe for an internal reset. There are some people and organisations already working to foster change, such as NextGen planners https://www.nextgenplanners.co.uk and The Verve Group The Verve Group | Financial Services. But not as you know it. (weareverve.co.uk), encouraging diversity, accessibility and innovation.  The financial planning profession remains however an aging population and now is an opportune moment for young people to join it.  It’s a great space in which to transform from learner to leader in much, much less than thirty years!

Rebecca Kowalski

Director, Overstory Finance

by Ellen Davis-Walker