The scheme will allow investors to become largely autonomous as they are given the information needed to make financial decisions.
Williams at Nutmeg agrees with ensuring young people are largely self-directed when making financial decisions in their life.
She says: "Sometimes the messages young people receive about money from parents and the older generation come across as patronising or critical.
"Young people may not be able to explain how pension tax relief works, but they tend to be far more money-aware than their parents were at the same age.’’
Robo advice
Robo-advisers could be another option for young people who might not be able to afford holistic financial advice yet, but who might use this as a stepping-stone towards independent financial advice later on in life.
While there are both advantages and disadvantages to using algorithm-based tools, robo-advice could help fill a gap at the lower end of the savings market.
The majority of robo-advisers use portfolio theory in order to build passive, indexed portfolios for their users and once established, will continue to monitor users portfolios to ensure that the optimal asset class weightings are maintained even after markets move.
In the past, this type of rebalancing has been frowned upon because it can be time-consuming and generate transaction fees but with robo-advisers, this is both automatic and can be lower cost.
Williams explains: "We offer access to globally diversified portfolios at a variety of risk levels that can meet the needs of most investors."
In this way, robos aim to make investment and wealth management more accessible by offering the same services as a traditional advisor but at a fraction of the price by eliminating human labour.
Another advantage over human advisers is that robos and similar services will take on anyone, with any bank balance, whereas financial planners typically do not take on clients with less than £100,000 in investable assets.
A benefit of platforms like this for young people is that it is not a long-term commitment, and they can withdraw whenever they would like.
However, such services are largely insufficient for older people who have already amassed wealth, or for those who need more complex services like estate planning, complex tax management and retirement planning.
Another example of tech being used to bridge the gap between young people getting to grips with short-term saving and making provision for their retirement is Aviva’s recent launch of a low-cost digital version of Aviva Financial Advice.
That said, Aviva, which owns robo-advisor Wealthify, said this would not be a robo-advice service, and that the main fact-finding would be done online through a personal finance portal, with advice given by an adviser at the point of decision making.
