For people approaching the concluding period of their working lives, being focussed on financial planning for the future is natural – after all, that future probably isn’t so very far away.
But for those in the first half of their careers, a combination of factors may mean that they are not optimising their financial future.
There is a useful phrase for such people: Young Accumulators. These are people aged under 40 or so, arriving at a stage in their career which could be termed success, and achieving a healthy level of income
But they are also the people who are most likely to be distracted by their immediate financial challenges, and by superficially attractive, simplistic models being proffered to help them plan for the future.
As well as being the time of life when there is still time for the magic of compounding to help secure their retirement, it is also the stage where there are most likely to be pressing current demands on their finances: upsizing the home to accommodate a growing family, supporting their children with school fees and putting them through university, helping to look after ageing parents, and so on.
It becomes very easy to focus on the immediate needs rather than the longer-term financial objectives. But this is the very life stage that many people later in life look back on and think, ‘I wish I had started planning then when I had the chance’.
These Young Accumulators have also grown up during a period of seismic change in the way we live our lives. In particular they are online natives – they have never really known a world without the internet and social media.
For this reason, they are especially likely to be attracted to simplistic, simplified online solutions to financial planning. But unfortunately, life – and especially life’s financial needs and aspirations – is complex, and such simplified models don’t look at the whole picture.
This is because good financial planning is every bit about understanding human beings as it is about building investment strategies. Only a real person can properly get to grips with an individual’s hopes and aspirations, their concerns about themselves and their families, and their attitude to such things as risk.
A financial adviser is a sounding board to enable each individual to articulate these things – and it is only then that a sensible financial planning strategy can be formulated.
This is not something that even the most sophisticated AI model can do, however neat and immediately attractive the idea of a simple, instant answer might be. And, of course, such online tools are not subject to the same level of regulation as a proper financial planner, and therefore do not offer the same gold-standard level of protection.
Being a successful Young Accumulator is the ideal stage of life to make plans for your financial future – and not being distracted by life’s immediate challenges, nor being drawn in by simplistic solutions to planning that future.