Lack of financial education is leading people to feel like they have “no control” over their money

Half of young adults say they have little or no control over their financial situation, according to research from a wealth technology startup.

And while 47 percent of all adults under age 60 save or invest little or none of their income, the problem isn’t entirely due to a lack of enthusiasm or interest, says Invessed’s founder.

Theo Paraskevopoulos says that young people in 2024 are no different from their parents 30 years ago, even though we have more information at our fingertips, and that is due to a lack of financial education from an early age.

He said: ‘There is very little financial education to be done at school, whether in the UK or not… people benefit from getting involved at a younger age.’

‘Our own experiences with money and investing are shaped by how we talk about money at home and in our communities.

‘If you have a family and you talk openly about money, budgets and pocket money, it will be easier for your children to become aware of it and feel comfortable with it as they grow up.’

Invessed, which offers an online platform for wealth management firms, says the need for younger generations to get involved in investing is particularly urgent as it expects there to be an $84 trillion wealth transfer from the baby boomer generation.

42 percent of younger investors were found to be uncomfortable with basic investing principles.

Theo Paraskevopoulos adds: ‘Over time, as you get into the system, you become more and more familiar with the fact that to buy a house you have to stick to a budget.

‘As your life becomes more complex, you’ll become more comfortable with managing your money.’

Younger people tend to have less money available to allocate to savings and investments.

However, Theo believes it is more important than ever for people to start 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 manifests itself in the form of a lack of commitment.

However, the problem also lies with wealth managers, Paraskevopoulos told This is Money, highlighting “a disconnect between how the industry views clients and how clients may have viewed wealth management”.

Wealth managers need to engage clients with a narrative that enables them to understand their financial situation and see how it can be improved.

“You can’t just throw data and reports at customers. You have to 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 he argues that with digital technology and especially AI, “wealth managers have the tools to scale their services, so they can also create packages with lower fees for beginner investors — people who are just starting out and who are typically forced to do-it-yourself services.”

“Why alienate younger investors?” he asked.

Of course, many people have the impression that investing and professional financial advice are not for them, but for the super-rich.

But there is no minimum benchmark for investing in the future, according to Paraskevopoulos.

“Obviously, you should save up for a rainy day or big-ticket items first,” Paraskevopoulos said. “Once you’ve covered the basics, you should invest.”

Invested’s survey of more than 2,000 people found that 56 percent of respondents avoid professional advice because of the high fees involved or because of outdated practices, meaning that in many cases these young people feel there is a boundary between them and people seeking professional financial help.

What financial lessons would you pass on to your younger self? Get in touch with us: editor@thisismoney.co.uk