Technology has become so ingrained in our everyday lives – not least during the past 18 months – that it comes as little surprise that advisers see it as a key tool in financial education and awareness.

At our fourth 2021 regional round table organised by PIMCO and Citywire, advisers from the South West of England and Wales outlined an array of initiatives they are participating in to help increase financial literacy and narrow the advice gap.

Plymouth-based Continuum has run an online financial education programme since 2015. It produces information on social media and is now achieving more than one million views per month on Twitter alone.

‘People look to brands for high quality information to try and increase their knowledge,’ said Darrell Stone, its head of partnership development. ‘We’re a relatively unknown brand that’s now coming through and if we’re getting that kind of traction, then it really does emphasise how much clients want and need this information.’

The firm regularly attains open rates of 50% on the material it distributes, with the most read content being tailored to a need at a specific stage of life.

‘It’s noticeable that people like things in chunks and pick their particular subject,’ said Stone. ‘It depends on the age of the client in question as to what they want to learn.’

Articles that help younger people prepare for a first mortgage get ‘massive traction’, likewise those on retirement planning and inheritance tax mitigation for older generations. For those somewhere in between, a mini-series on ‘Finance in your 40s’, ‘in your 50s’ and ‘60s’ were also enormously popular.

Producing content geared to a specific audience and breaking down information into digestible pieces resonates with Nathan Long, a senior analyst at Hargreaves Lansdown.

‘The point around personalisation is absolutely key,’ he said. ‘Unless you’re going to make that content relevant to that person at that point in time, it’s very, very unlikely that they’ll read it.

‘It [financial education] brings up these ideas of going back to school, being lectured to, being told what you need to know and actually, the reality is that people need to gather this information as they grow with their finances. Bitesize information, that trickle of information, improving your understanding as you get older is really important.’

That said, he believes there are a couple of times in people’s lives when a set-piece event makes the most sense. An obvious one is when people join the world of work and get their first wage. Another is a ‘midlife MOT’ at age 50. The benefit of educating people in their fifties extends to their offspring, too.

‘If you think of people who are in their 50s and 60s now, their parents would only have ever had final salary pension schemes,’ said Long. ‘The issues that are being dealt with by today’s soon-to-be retirees are not the issues that were dealt with by their parents – there’s no understanding passed down.

‘The whole issue of financial education is way more nuanced and we need to think about how it all feeds off each other and trickles down through society.’

Pizza posts

Asset managers are using technology to educate and inform, too. Lee Dineen, a senior vice president at PIMCO, referenced Fidelity’s recent food related TikTok posts (one uses a burrito to explain diversification via mutual funds, while another uses pizza slices to explain how to build a budget) as evidence that the industry is really beginning to think differently.

While some information is buried in the ‘deep, dark depths’ of company websites, things like podcasts and infographics are being used more widely to help demystify an industry awash with acronyms.

‘Utilising technology is vitally important,’ said Dineen. ‘Our industry is synonymous with jargon. It’s important to try to take that out of the equation and make things simple, pictorial, easy to understand. It’s about trying to think in this new, modern way.’

While most asset managers are disseminating educational content in one way or another, working as a community could have greater impact.

‘There is greater power in trying to act as a group of businesses, rather than as individual businesses,’ he added. ‘If we were to do that, there’d be a greater reach, a greater uptake and perhaps greater content produced via some form of initiative and working together.’

While technology can be a great enabler, it can also distract or indeed detract from the key financial lessons that people would benefit from. Social media posts that furnish people with information on the latest investment craze – whether meme stocks or cryptocurrency – serve to undermine the building blocks of sound financial planning.

Long said Hargreaves Lansdown has attracted almost 300,000 new clients since the start of the first Covid-related lockdown, many of whom took their first steps in investing by stock-picking.

‘What do people want to know and what do they need to know? How do you try and balance the two? There are lots of things which aren’t very sexy when it comes to financial services. There are lots of things that are a bit higher octane. There was demand to know about things like meme stocks during lockdown,’ he said.

‘All the content that we’re putting out is trying to appeal to that desire, but give a balanced message – you might want to take the plunge with this, but what do you think about diversification? For instance, airline stocks very early on in lockdown, when share prices went through the floor, you might not want to hoover up all those stocks or you’re going to be pretty overweight one issue.

‘How do you capture the imagination, but then land the message about sensible financial planning? It’s quite difficult, but it’s really good to see that there’s an appetite to address that among the industry.’

Regulation compounds the issue. Even a company like Hargreaves Lansdown, which employs more than 100 marketeers to design communications to appeal to clients, is limited when it comes to sparking the imagination.

‘They [the marketeers] have basically got one and a half hands tied behind their back,’ said Long, who is eagerly awaiting the findings of the Financial Conduct Authority’s (FCA) call for input last year to help shape its work on improving the consumer investment market.

‘There’s definitely this balance, which the FCA needs to strike, between encouraging participation, but at the same time ensuring consumer protection,’ he added. ‘It’ll be interesting to see quite how much that features in the output and whether we might see a shift in the advice/guidance boundary to help.’

Early steps

Everyone around the virtual table felt some sort of responsibility to try and educate people, but where should that start?

For Liam Fowler, a chartered financial planner and investment analyst at Heron House Financial Management in Newport, it is important for people to understand short-term debt at the very least before they leave the education system and enter the world of work.

‘People can get into trouble before they even reach that point where they’re employed,’ he said. ‘They may have made some mistakes, such as store or credit cards or other forms of short-term debt, that could affect them not being able to get a mortgage further down the line.

‘It really does need to happen as early as possible so that these youngsters don’t make the mistakes and build up a bad credit score that will impact those major decisions on wanting to get a house in the future.’

The next step for Natasha O’Neill, head paraplanner and chartered financial planner at Strategic Solutions in Bournemouth, is an understanding of cash and the risk of holding cash when interest rates are lower than inflation.

Thereafter, people need to be versed in the basics of investment and appreciate that something that looks too good to be true invariably is. Is an investment FCA regulated and what are the compensation limits should things go wrong?

A woman who recently approached O’Neill had fallen victim to a scam, only to later read reviews that would have rung alarm bells for her.

‘Have a look at reviews,’ said O’Neill. ‘Do your due diligence before you make a decision and get a second opinion. If you want to go to two advisers or two investment managers, that’s okay; as long as you’re comfortable and you’re getting financial advice, that’s the main thing.’

Local support

Hargreaves Lansdown supports a local initiative called Sums and Scrums, which is run by Bristol Sport. Some of its staff volunteer to go into primary schools to help improve numeracy.

It has also been working within a charity called 1625 Independent People, which helps people aged 16 to 25 in Bristol, south Gloucestershire, north Somerset and Bath and north-east Somerset. These young people are either at risk of being homeless or have been homeless and the advisory firm aims to provide them with financial education for when they get back into the world of work.

‘It helps to prevent them from slipping into some bad habits which might have caused them to be homeless in the first place,’ said Long. ‘There are lots of things that we’re doing all across the spectrum, from primary schools through to starting in the world of work.’

Strategic Solutions has been delivering talks at Bournemouth University to give students an introduction into finance. They cover subjects like retirement planning – the reality of being unable to depend on the state pension and the importance of starting a pension early in one’s career.

‘It’s hard to get youngsters excited about pensions unless you’re “big nerds” like us,’ said O’Neill. ‘I’m generalising there, but it’s important to start them as young as possible, get them interested in it and visualise things. Graphs and charts seem to help to see how far your money will go.’

Fowler at Heron House hopes to deliver a presentation at his former secondary school. He believes there is merit too in engaging with the children of existing clients.

‘Something quite straightforward that we can do is intergenerational planning with our existing clients – involve the children and set up junior ISAs, set up lifetime ISAs and start educating them quite early on about these sorts of things,’ he said.

‘It’s one of those areas where it’s not very profitable for a financial adviser to look after children, but having something set up so early gives them a great foundation so that when they do inherit large sums, they appreciate it and that money isn’t just wasted.’