Many financial advisers are not able to take on clients whose portfolios are below a certain threshold, leaving lower-income investors – particularly millennials – in a bind for professional investment advice.
Canadian investors seem to know this: It's not that they don't appreciate the advice but many feel they need at least $25,000 in savings to make it worthwhile for the adviser to talk to them, according to an investor survey released last week by AGF Investments Inc.
As a result, millennials are experiencing a different financial frontier than their parents and grandparents, veering away from the bank branches and turning to more online and mobile tools for investment planning.
Here are several alternative options for millennials looking for financial advice:
Most financial advisers charge fees based on the amount of assets they are managing. A fee-for-service adviser typically only charges for the services required, similar to a lawyer or accountant. They may charge by the hour or one lump-sum payment.
Shannon Lee Simmons, a financial planner with Toronto-based Simmons Financial Planning, runs a fee-for-service firm that targets the younger generation. Her fees can range from $200 to $500 depending on what type of financial advice is required.
"Some individuals may just want some help developing a monthly budget, while others will want us to look at their entire financial planning needs," Ms. Simmons says.
Ms. Simmons also provides clients with an online finance school that provides "do it yourself" investment modules to further enhance financial planning needs. Courses such as "Babyproofing Your Finances" and "Budgeting With Your Boo" are designed specifically for millennial clients who want to learn more but have fun at the same time, Ms. Simmons says.
Millennials are interested in using online solutions to plan their futures, with 76 per cent saying they would consider utilizing a free app or online tool to accomplish their goals, according to the 2015 Millennial Money Mindset report by iQuantifi.
As well, the report found only 17 per cent indicated they needed to meet with a live person to be comfortable with the advice. For that reason, robo-advisers are becoming popular investment tools for Generation Y.
While many of these online portfolio managers dedicate most of their platform to the investment management of your portfolio, there are some that have added online financial planning tools to the platform.
Vancouver-based Wealthbar offers a free online tool that allows users to input their personal financial data to determine their net worth and future projections.
The tool will determine how much an investor should allocate to a registered retirement savings plan, a tax-free savings account and non-registered investment accounts.
In addition, if someone is looking for further advice on insurance, investments or tax-planning needs, they can request to speak to a licensed representative.
Do-it-yourself investors may prefer to follow a few quality financial bloggers that can help provide several tips and insight with investment planning. Millennial bloggers who focus on finance such as moneyaftergraduation.com and brokemillennial.com are gaining popularity as younger investors are more likely to turn to someone their own age for advice.
Look before you leap
For individuals who are looking to build financial knowledge before making any investment decisions, mock trading platforms allow investors to get a closer look at how the stock market works, but without the risk. In October, mobile applications provider Voleo Inc. launched the Voleo TSX Equity Trading Competition – a simulated public markets investment competition that provides undergraduate and graduate students across Canada with the tools and information they need to enter the Canadian investment landscape.
Teams are given $1-million of virtual currency to compete for $25,000 worth of prizes by creating and managing a simulated equity portfolio.
"This application is breaking down the barriers, like fear or lack of knowledge, that hinder new investors from entering into the financial markets," Thomas Beattie, chief executive officer of Voleo, said in a statement.