For advisors that have been in the business awhile, particularly those that were around in the 1990s or earlier, it feels as though there’s a constant urging to tend to various generations.
Advisors have long been told to focus on baby boomers, which , to an extent , is understandable given the vast wealth accumulated by that generation. For whatever reason, Gen X is largely ignored in the financial advice business, but asset management firms are quite enthusiastic when it comes to providing service to and garnering assets from millennials.
That palpable enthusiasm also applies to Gen Z – the group after millennials. For advisors that haven’t been keeping score in the office, mainstream media and the financial advisory industry classifies Gen Z as those born in the mid- to late 1990s through the early 2010s. In other words, this generation’s familiarity with some of the most venerable of 1990s pop culture, such as “Beverly Hills 902010” and “Seinfeld,” comes by way of reruns.
Said another way, an advisor that’s a baby boomer, even a Gen X’er, could find it difficult to navigate Gen Z interactions. On the other hand, the good news is that there’s no reason to be intimidated by dealing with Gen Z clients…as long as advisors enter the conversation with the right information.
Identifying Gen Z Desires, Goals
Like any other generation, Gen Z has hopes, dreams and goals. And like the generations before them Gen Z’s financial desires and objectives aren’t the same as previous generations.
One point of interest with this group is that they are optimistic and that’s saying something because many of them around for the global financial crisis and all of them were around for the coronavirus bear market of 2020 and today’s hyper-inflation environment.
“This spirit is also reflected in our willingness to learn more about investing and becoming engaged in topics pertaining to personal finance,” notes Morningstar Katie Sasamoto-Kurisu. “And because we are motivated and likely more willing to be receptive to structured guidance, advisors and financial planners are well positioned to engage with us as a group.”
Looked at differently, an advisor that’s highly analytic and a realist ought to consider softening his or her approach when dealing with Gen Z. That’s not to say this generation doesn’t want to hear the facts. They do, but a doom-and-gloom approach won’t resonate with this generation.
Another factor to consider and one that’s highly relevant amid the student debt controversy is that debt reduction is a preeminent objective for the Gen Z crowd. Advisors need to know that going in and have the data and strategies to help prospective clients realize debt elimination goals.
“Many Gen Z-ers are dealing with student debt as we enter the workforce and begin our journey of financial independence. To discern where your clients stand in this area, start a conversation about their target retirement age and evaluate their certainty about being able to retire successfully,” adds Sasamoto-Kurisu.
More Tips for Engaging Gen Z
Another Gen Z trait that should encourage advisors is the point that this generation is confident in their investing capabilities, but they yearn for more education.
“It’s difficult for an individual to gauge their own level of financial proficiency unless they have a frame of reference, like meeting with a certified financial professional—which most of us Gen Z individuals have not yet done,” concludes Sasamoto-Kurisu. “For that reason, it may be beneficial for advisors to objectively gauge their young clients’ financial understanding when constructing plans.”
Bottom line: Advisors that make an effort to identify Gen Z’s priorities and tendencies while guiding them to right mental place regarding investments will have success with this demographic.