Gen Z is defined as the group born between 1997 and 2012 so the oldest members of that group are 28 today and many aren’t even in college yet, let alone the workforce. Given that math, it’s likely this generation represents a scant percentage of advisors’ client rolls.
When accounting for sheer youth and the point that most working age Gen Zers aren’t yet wealthy, it’s understandable that the wealth management is largely glossing over this demographic. That’s a temporary phenomenon and smart advisors are already keeping an eye on Gen Z, if not connecting with them, for multiple reasons. Those include older Gen Zers being somewhat levered to the great wealth transfer and the point that this demographic is chock full of enthusiastic investors.
Then there’s technology element. There’s no denying that the younger clients are, the more likely they are to be relying on social media for financial advice. That’s particularly true among Gen Z clients and investors and that highlights the need for improved connections between this age cohort and the wealth management community.
Getting there is a give-and-take and requires understanding the part of advisors, implying empathy and soft skills are important when working with Gen Z prospects.
Gen Z Has Seen a Lot
When it comes to market climates and investing, the older a generation is, the more accurately they can lay claim to having “seen a lot” in terms of bull and bear markets. On a relative basis, however, Gen Z investing lives have already been through plenty of ups and downs.
Many were invested or got into the game during the COVID bear market, meaning they were around for the unprecedented inflation spike and subsequent surge in interest rates in 2022. That also confirms many dealt with this year’s tariff tumult. Point is Gen Z is already battle-tested and they’re contending with other circumstances advisors need to be aware, including student loans.
“This burden is weighing down Gen Z at an important time—when they should be taking the next big steps in adulthood like buying a house or getting married,” according to Nationwide. “Nearly half of Gen Z investors (46%) cited paying down loans and debts—not only student loan debt but also credit cards and car loans—as a top financial commitment over the next 12 months.”
Translation: advisors that connect with Gen Z understand the balancing act this generation is dealing with. They want to accomplish long-term goals, such as home ownership and strong retirement savings, while clearing short-term hurdles, including debt reduction and establishing budgets.
“Many Gen Zers are uneasy about their retirement prospects, and this outlook is altering their views and behaviors toward retirement planning,” adds Nationwide. “It may not be surprising to learn that Gen Z has a more unconventional view of retirement than older generations. In our survey, 38% of Generation Z believe the standard retirement age of 65 isn’t relevant to them in today’s economic environment. Around half (48%) now plan to work longer since working from home makes it unnecessary for them to retire at 65.”
Speaking of Gen Z and Retirement…
With the oldest Gen Zers being 28 today, it’s reasonable to assume that on average, they’ve got another 30 to 35 years in the workforce and those are potentially rosy assumptions. So it’s also reasonable that many members of this demographic and many advisors aren’t thinking about retirement as it relates to Gen Z.
Further highlighting the need for advisors to better engage Gen Z, Nationwide notes that many Gen Zers believe the prospect of a sound retirement is out of reach. Worse yet, 17% of them are “doom spending,” or spending heavily on discretionary and leisure experiences and items because they don’t see the point in saving for retirement. That’s something advisors can work with because as the Nationwide chart below confirms, the earlier someone starts investing, the more they have when they have when they reach retirement age.
Bottom line: Gen Z and advisors need each other and the latter can better connect with the former by establishing solid plans, including budgeting, debt-reduction strategies, improved financial education and avenues for retirement savings that are practical to implement right now.