Good morning and welcome to your Morning Briefing for Friday 18 August 2023. To get this in your inbox every morning click here.
Empower younger generation with financial education
Empowering the younger generation to manage their money intelligently needs to be a national priority, according to national IFA Continuum.
The firm said young people are facing an ever-present temptation to spend with the instant gratification seen every day on their social media.
And that never before in history have young people witnessed their contemporaries earning so much money.
Unaffordable premiums
Insurers have been urged to help financially vulnerable customers struggling to pay their premiums. This is a particularly pertinent issue for the industry in light of the new Consumer Duty rules.
The first step in protecting vulnerable customers is identifying them. Recent research by Legal and General found that of those with lower savings and income, 61% were female, compared with an approximate 50/50 gender split of non-vulnerable customers.
Quote Of The Day
The fact we are living longer is a real positive but as the state pension bill continues to grow, we need to look at how we can continue to support it without placing an intolerable burden on a smaller working population. They already face their own financial challenges of saving for their own retirements and getting on the housing ladder.
-Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, commenting on ONS data on births in England and Wales in 2022 which showed birth rate slumps to 20-year low.
Stat Attack
Despite financial literacy being a crucial skill in today’s fast-paced world, many people still find financial jargon confusing and intimidating. Below is a table showing the top 50 most confusing financial terms based on their monthly search popularity.
| Rank | Finance term | Monthly average searches for the definition, globally |
Annual average searches for the definition, globally |
| 1. | Equity | 277,000 | 3,324,000 |
| 2. | GDP | 162,000 | 1,944,000 |
| 3. | Acquisition | 106,000 | 1,272,000 |
| 4. | Principal | 104,000 | 1,248,000 |
| 5. | Correlation | 82,000 | 984,000 |
| 6. | Asset | 73,000 | 876,000 |
| 7. | Net Worth | 41,400 | 496,800 |
| 8. | Gross Income | 40,000 | 480,000 |
| 9. | Overdraft | 30,400 | 364,800 |
| 10. | Investment | 30,000 | 360,000 |
Source: City Index
In Other News
Increasing numbers of homeowners are making overpayments on their mortgages to reduce their debts and improve loan-to-value ratios, according to national advice firm Continuum.
More clients are paying back more than the minimum their lender requires in order to put themselves in a better position to remortgage in the future.
Whilst some clients are making regular monthly payments over their minimum amount, other clients with irregular income (such as self-employed entrepreneurs paying themselves dividends) are making one-off lump sum payments.
Anthony Harris, Independent Financial Adviser at Continuum, said: “In simple terms a mortgage overpayment means the money you borrowed is being paid back quicker.
“Overpay by enough, and you could clear your mortgage several years faster. You become mortgage-free sooner – and because you have cut the number of years when you are paying interest, you pay much less overall.
“The benefits don’t stop there. By overpaying you can decrease your property’s loan-to-value (LTV), meaning that you may be able to secure better rates when it becomes time to take on a new fixed deal.
“Paying even more to your lender than is necessary each month can be painful. But it could be very worthwhile.”
Multi-disciplinary professional services firm, Progeny, hosted its second annual summer school programme for 16-to-18-year-olds last week.
Designed to give students an insight into roles within the financial services sector, the programme hosted 13 students, nearly half of whom were young women, up from a quarter who were female in 2022.
Students enjoyed a varied schedule, including sessions on the advice process, paraplanning, investment management, cybercrime and CV and interview coaching. They were also given the opportunity to take part in a mock investment portfolio challenge and to film their own show reel in Progeny’s in-house video studio.
Running from 7th to 11th August, the programme was designed to help inform students’ decisions on a future career and overcome some of the traditional stereotypes that can exist about working in financial services.
Progeny head of compliance and policy Sarika Dhanjal said: “After the success of our first summer school last year, Progeny has committed to making this an annual event. Financial services still lack visibility as a career option for students and I’m so pleased that this year’s programme also attracted more young women, as one of the aims was to showcase our sector as a great place for female talent.”
From Elsewhere
Rise in UK company profits puts Bank’s stance on prices under scrutiny (The Guardian)
Bigger than expected drop in retail sales after July’s wet weather (Sky News)
Fine threat if banks fail to provide access to cash (BBC)
Did You See?
Victoria Ross’s must-read article on how professional qualifications aren’t up to scratch for the modern world.
She writes: “The balance between technical skills and interpersonal skills will vary from planner to planner and if you ask individuals how much their job necessitates each, I’d imagine the answers will similarly vary.
“However, I think all would agree financial planning absolutely cannot be a success without a level of competency in interpersonal communication and financial coaching, along with some understanding of behavioural finance.”
