It is never too early to seek financial advice to ensure financial well-being in both the present and the future, however for the younger Generation Y and Generation X, there is a lingering perception that advice is only needed when you approach retirement.

As we all know, lack of professional advice when it comes to our finances can lead to poor investment decisions, or in the case of many young people and superannuation, a ‘do nothing’ approach. This ‘set and forget’ philosophy can put their long term future in jeopardy as their super balance may fall short of providing an adequate lifestyle in retirement.

According to CoreData’s 2013 Member Growth Report, in the past year, only 12% of Gen Ys regularly topped up their super, while three in four (74%) never made additional contributions. And while additional contribution frequency is marginally better among Gen Xs, it remains low with only one in five (22%) regularly contributing on top of the Superannuation Guarantee and 68% having never topped up their account.

One explanation is that among younger people, a large chunk of their income is eaten up by mortgage repayments, considering that according to the ABS¹, three in 10 (30%) Gen Ys and three in five (60%) Gen Xs have a mortgage. This leaves little leftover cash for living expenses, let alone a long term savings vehicle.

Another explanation, however, is that younger people do not appreciate the benefit of topping up their super early or do not know how to do so.

This is where financial advice can play a role with the superannuation of younger generations. Advice can help younger people to develop and implement strategies on budgeting and managing their cash flow in order to allow mortgage repayments in addition to additional super contributions, for example via salary sacrificing.

Not only do the younger generations need financial advice, the large majority also want it. According to CoreData’s 2013 Member Growth Report, seven in 10 (69%) Gen Ys are so called ‘coach-seekers’, in that while they want to be involved with their finances, they are seeking advice and guidance. More than three in five (62%) Gen Xs are also coach-seekers who want advice.

However, previous CoreData research has found that trust, proof of tangible value added and affordability of fees are key barriers to seeking financial advice. Scaled advice on a single issue, which costs less than full advice, is a potential solution. Scaled advice provides a unique opportunity for younger people to begin conversations, appreciate the value of advice and develop trusted relationships with financial advisers which may go on to become full advice arrangements.

Many super funds now offer access to financial advice to their members, including scaled advice capabilities. Super funds therefore also have a role to play to encourage greater take-up of advice by the younger generations.

From the perspective of a financial adviser, the potential for a long-term relationship is the key benefit of providing financial advice to younger people, be it full or scaled advice, through super or direct to the consumer. The potential target market is huge, given that more than four in five (83%) Gen Ys and three in four (76%) Gen Xs are currently unadvised.

While the ageing population means financial advisers will still have to focus on the needs of the baby boomers and pre-boomers, Gen Ys and Gen Xs must not be ignored. The younger generations need and want financial advice, and financial advisers need to appreciate the enormous potential behind Gen Ys and Gen Xs in driving future growth and profitability for their business.