Parents feel incompetent advising children on finances.
21 June 2012
New research published today 21st June by Magnified Learning shows parents feel incompetent advising children on finances.
The research reveals that children are turning to parents for financial advice;
- For 83% of 14-16 year olds, parents are first port of call for financial advice
But parents do not feel competent offering advice on some of the most important financial products:
- 66% of parents do not feel competent at advising their children about investments
- 62% of parents do not feel competent at advising their children about life insurance
- 58% of parents do not feel competent at advising their children about pensions
- 39% of parents do not feel competent at advising their children about bank accounts
With other sources of financial advice being rolled back, a dangerous ‘advice gap’ is forming.
This means that parents are often left footing the bill for their children’s spending, with many middle aged people relying on their parents for financial help. The research shows:
- 40% of 35-54 year olds have been given money by their parents in the last year – each receiving £1,030 on average.
Magnified Learning believes these results are particularly concerning given the Money Advice Service is under review and the Retail Distribution Review being implemented in January 2013 will lead to people having to pay for independent financial advice - meaning that it will only be affordable to those who are already in a comfortable enough position to pay for advice.
Therefore parents are likely to feel even less competent when their children turn to them and with no place for financial education in the national curriculum, it is clear that there is an advice gap which needs to be filled.
Children need good advice;
The research also shows that whilst parents do not feel confident in offering advice, children really need good advice, with one in five14-16 year olds having a ‘buy now, pay later’ mind-set.
With the ‘buy now, pay later’ mindset kicking in so early, it is important to offer free financial training to children so that they can draw on the help of professionals rather than just relying on their parents.
Money, Money, Money;
A programme run by Magnified Learning called Money, Money, Money has been trying to turn children into better financial planners and ‘savers’ rather than ‘spenders’ with some great successes.
The programme involves employees from savings & investment businesses and financial planning providers such as Legal & General, Bluefin Corporate Consulting and St James’s Place Wealth Management collaborating to deliver financial education in secondary schools. After a day’s training:
- 84% of children described themselves as “savers not spenders” (up from 55% at the beginning)
- 71% of learners felt very confident about the financial demands of life compared with 7% at the beginning
- 62% said that they now recognised that it is important to plan their personal finances.
Aroop Tanna, Director, Magnified Learning said; “There is a perfect storm coming - everyone agrees saving and prudent financial management are key life skills that young people need, yet there is a scaling back of free financial advice and formal financial education in schools – leaving a dangerous advice gap which needs to be filled.
“Through Magnified Learning’s Money, Money, Money programme responsible businesses such as Legal & General, Bluefin Corporate Consulting and St James’s Place Wealth Management are stepping in to provide advice to children in schools across the UK. The programme uses the skills of people working in business to increase young people’s confidence and awareness of financial demands and has shown some very encouraging signs.”
Mark Gregory, Legal & General Executive Director Savings, who has volunteered for part of the programme said; “We are committed to helping the next generation prepare for their working lives and firmly believe that Magnified Learning’s approach has a real impact. It not only helps young people to look after their finances properly but also gives them the opportunity to develop their own skills and confidence.
“Magnified Learning’s Money, Money, Money programme is vitally important given the clear evidence of a growing advice gap - young people need to be provided financial education so they can make sensible financial decisions.
“Money, Money, Money is an initiative I am personally very keen on. In the last two years over 250 employees have worked with 3,000 year 10 pupils (14 and 15 year-olds) to help them understand the challenge of personal finance management as they move from home life into adulthood, a key change point for them.”
For more information or access to spokespeople and case studies contact Champollion:
Telephone: 0207 550 5632
Notes to editors
1. Magnified Learning
Magnified Learning specialises in designing and delivering experiential learning programmes for large businesses.
They provide structured opportunities for targeted groups of employees to develop key skill sets by helping young people to explore a range of social issues directly affecting them.
As well as contributing positively to the business's reputation, Magnified Learning enables it's clients to better understand their future customers and colleagues through active learning relationships.
2. Money, Money, Money 2012
The new programme kicks off in June running through to mid December 2012. It will involve approximately 300 employees from Legal & General, Bluefin Corporate Consulting, Family Investments, St James’s Place Wealth Management, Saga Insurances, Bank of New York Mellon and Jelf, working with up to 3,000 school students aged 14-15 in England, Wales and Scotland.
To get a representative picture of the how competent parents feel giving financial advice and how much money parents are giving their children, Magnified Learning commissioned Opinium (2,000 UK adults aged 18+ in May 2012) and TNS (1,004 UK adults aged 18+ in April 2012) to carry out the surveys.
The data also shows that those in lower socio-economic groups (CD2E parents) are much less likely to report feeling ‘very competent’ at giving financial advice on investments, pensions and bank accounts.
For more information please contact: