The following article examines how advisors should work with first-time investors – avoiding the mistakes of presuming too much and assuming familiarity with arcane jargon, while also avoiding the mistake of patronising clients. Balancing supportive advice and realism requires "a tailored, thoughtful approach grounded in real-life guidance," the author says.

When people invest for the first time, getting their "hands dirty" can be a daunting, sometimes exhilerating, and risky journey. Also, there are those who have made substantial money at a young age and want to conserve liquid wealth even as they continue to build new companies. The skills required to start and run a firm aren't the same as managing a portfolio of varied investments. How should advisors approach, and work alongside, novice investors? To answer that question is Freddie Pattenden, financial consultant at Oury Clark Financial Services. The editorial team thank him for his insights; the usual editorial disclaimers apply to views of guest commentators. Email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

The UK’s investment landscape is changing. According to research conducted by Blackrock in 2024, 36 per cent of UK adults are investors, up by 21 per cent  from 2022. The biggest increase has been amongst young people, with a 30 per cent rise in the number of 25 to 34-year-olds investing since 2022.

With this increased popularity comes the emergence of a new group of first-time investors: young entrepreneurs, crypto speculators, influencers, or people who’ve come into money quickly through fast-growing industries or sudden windfalls. Sure, this new group often has access to significant capital, but many aren’t familiar with what to do with money and lack a mindset geared towards long-term planning.

For advisors, this creates both opportunity and challenge. These clients are often sharp and ambitious, but their experience with money can be shaped by short-term thinking, hype, or volatility. Supporting them properly takes more than technical knowledge. It calls for a tailored, thoughtful approach grounded in real-life guidance.

Here are three key areas to consider when working with clients in this position:

1. Financial literacy and communication style
Levels of understanding among first-time investors can vary. Some, particularly those active in areas like crypto or online business, might sound confident and well-informed, but are they?

A 2024 study by the Financial Conduct Authority found that two thirds of young investors make investment decisions in under 24 hours. This reflects the overconfidence that many first-time investors have, despite not having a deep understanding of key concepts. 

It’s important to gauge a client’s financial knowledge early on. Misunderstanding basic concepts can lead to unrealistic expectations and poor decisions. For instance, a new investor may overestimate their returns, expecting to ‘get rich quick’. This is increasingly likely with the rise of crypto influencers, with some making unfounded claims and overpromising on returns. Research conducted by Fidelity earlier this year actually found that nearly half of first-time investors have made a bad investment decision based on information from social media. If approached by a first-time investor drawn in by the allure of quick gains from high-risk investments such as crypto, the advisor must ensure that the client fully understands the investment being offered and what protections they are entitled to. 

Take the time to explain basic principles such as diversification, fees, and risk vs return. Use analogies and avoid jargon. Break topics down into manageable steps and use visual tools where possible – the goal is to help clients make informed decisions and build confidence, not just follow instructions blindly. Clients should leave meetings feeling not only that they’ve had good guidance, but that they actually understand it. 

2. Understanding the "why"
As advisors, helping clients define what they want their money to achieve is one of the most valuable things we can do. Sometimes that means narrowing down a long list of ideas. Other times it’s about turning broad ambitions into specific, achievable goals. 

A strong financial plan should be built around a clear sense of purpose. In order to align returns and risk appropriately, clear goals are needed. But clients who’ve received money suddenly often haven’t stopped to think about what they really want it to do for them and often have vague objectives. For instance, a 2023 study by the CFA Institute found that Gen Z’s top three financial goals were saving for unexpected expenses, and having enough money to travel, and saving for retirement.

In addition, many first-time investors may want the stability of long-term wealth but may also enjoy the thrill of quick wins. Whilst long-term security and short-term excitement are competing motivations, advisors must acknowledge both. An advisor who chooses to dismiss a client’s interest in certain stocks or bitcoin may lose their trust – it's important to acknowledge the client’s interests and build a portfolio strategy that will help to build long term stability but also satisfy their needs. 

It is also worth digging into what those goals actually mean. If someone says they want a £1 million ($1.3 million) pension pot, why? How much income do they want in retirement? What kind of lifestyle are they aiming for? By framing goals in real-life terms, you make the plan far more useful and relevant.

3. Sustainability and longevity of wealth
The key to supporting first-time investors is to design an investment strategy that is both scalable and sustainable: a plan that can grow with them. 

Within this strategy, it is crucial to plan for uncertainty. Clients in high earning but unpredictable sectors such as sport or music can earn a lot in a short space of time. But that income isn’t always guaranteed to last. Things like injury, platform changes, public interest or even political cancelation can affect future earnings.

Therefore, advisors must ensure that they are stress-testing the plan, keeping spending sensible, and building buffers. Advisors should discuss with their clients the importance of habits over products – setting up automatic monthly contributions, for instance, rather than investing a lump sum, can be an attractive option. Emergency funds and good budgeting go a long way, and income protection or relevant insurance should be part of the picture too. 

Cashflow modelling is really helpful here. It shows how long a client’s wealth might last and what changes could impact it. It also helps to manage expectations and spot risks early. However, this must be interactive – models should be revisited regularly to adjust for lifestyle changes, shifts in risk appetite, and market conditions. This also helps first-time investors to stay engaged as visual projections such as cashflow models can help to make abstract concepts more tangible. 

Helping clients understand the difference between making money and keeping it is key. Long-term security doesn’t come from income alone, it comes from structure and planning.

Conclusion
Working with first-time investors who’ve come into wealth quickly involves much more than just giving financial advice. It’s about understanding people, helping them make sense of new situations, and giving them the tools and knowledge to build something sustainable.

As nefarious crypto influencers continue to gain traction, the human touch of a skilled advisor can make a real difference. By educating clients properly, helping them set meaningful goals, and building a plan that accounts for unpredictability, advisors can help them avoid costly mistakes and, in doing so, build meaningful, valuable relationships with clients over time. 

In the end, this is about protecting wealth, creating structure, and helping people feel confident in their financial future. Done well, it can be hugely rewarding, for both advisor and client.