For whom the Digital Advice Tolls? It Tolls for Thee!

Over the last couple of weeks I have had the pleasure of speaking at two conferences — one conference on the “forgotten generation”, i.e. baby boomers, and the other, focused on Millennials and Gen Z.

One of the main things that struck me in both of these discussions is the pre-conceived notion that we have about people of a particular age, and how that impacts the way we build products for them and market to them. But here’s the thing- given the way technology is developing, we are quickly moving to an era of “personalization of 1” — in other words, we don’t need to categorize people by age or any other general attribute- we can meet them right where they are. Why give someone a product that roughly meets the “rule of thumb” when the product can reflect the unique situation of that individual? One clear example is “how old is someone when they plan to have their first baby?”. According to this report published in 2016 by Tim Matthews, the age of first-time mothers has increased by 5 years since 1970, up to today. Many more women in their 30’s and 40’s are having babies, so planning for the new arrival — financially and otherwise — tends to be very different at that age as opposed to when having a baby in your early 20’s was once the norm. Being able to address unique and individual circumstances thus becomes important, in order to deliver the right advice.

Pop quiz:

Which generation has 21% of its population estimated to have been saving money since they are 10 years old?

According to the Center for Generational Kinetics, it’s Gen Z — those born after 1996. That group is also much more averse to debt than their older Millennial siblings, and as such have a more optimistic view of their financial future.

Interestingly, Millennials are unlikely to have a positive net worth, but many in that situation still expect to become millionaires. You can read more about that here, but suffice it to say that it seems that Gen-Z has reaped the lessons of the challenges that Millennials have had to face, given their experience of growing up during the Great Recession.

Gen X and Baby Boomers tend to be the least optimistic about their financial future. With less time to make up for past errors, it makes sense that they would be more pessimistic about how to right whatever wrongs need correcting. The impact of the economic downturn of the prior 20 years means that retirement savings in many cases, have been significantly diminished versus expectation and need.

Another pop quiz — how old is Vint Cerf, Google’s Chief Internet Evangelist and one of the “fathers of the internet”?

68 Baby-Booming-years old. And like many of his peers, Cerf is extremely comfortable as a leader of the digital age.

So often people over 40 (over 35? Over 30?) are painted as fumbling with technology, and fearful of engaging over digital platforms. As Cerf and many others show, this is a generalization that doesn’t really hold up under scrutiny. My mother-in-law who was born in 1935, had a very illustrious career as a computer programmer — and these are not “one off” examples. With home computers coming into vogue in the late ’70s and early ’80s, the people who bought them are now well into their retirement!

A myriad of fintech apps are focused solely on marketing to Millennials or Gen Z, when the reality is that it is the whole family that needs to think about financial planning — both because there are obstacles at all stages of life, and also because there is about to be a major wealth transfer from Baby Boomers to their children. Segmenting by age causes some serious limitations in truly addressing the full spectrum of issues. Financial planning is something that has tremendous value for people at every stage of life. Not everyone has experienced fiduciary, holistic planning and advice — so the benefits are not universally understood.

I have heard from some people that they think that financial planning is only for those with “enough money to invest” when in reality, high quality financial planning should be able to help with

• how to best save
• how to best pay down debt
• how to be able to afford the things in life that matter most to you

For many people, investing is a part of it — but not for everyone at every stage of life. Many people feel “stuck” with their financial situation — whether it be burdened by student loans, saddled with high fixed costs in the form of a mortgage and child care, or facing an uncertain retirement situation. The reality is that many people have more “levers” in their financial life than they are aware of, but they may need some help in knowing what questions to ask, and what scenarios to consider.

Whether struggling to figure out how to pay for college, being able to afford a baby or a home, or any of the hundreds of other objectives that we all have for our families or our futures, getting advice can help. Although there are terrific human financial advisors, you need to have quite a lot in assets under management (typically $100k or more) to avail of their services — and be willing to pay $5000 up front, for a one time financial plan. This is where technology becomes the great equalizer — making it possible through AI to provide holistic, affordable, fiduciary, unbiased financial advice. And no need to feel awkward telling another person about the shambolic state of your finances, because no human will ever see your inputs.

It is through technology that we can create the true democratization of personal finance.