Advisors, Trust, and Gen Z Money Choices

Trust plays a central role in Gen Z's financial decisions, guiding which sources this youngest generation of adults look to for financial advice. They want to take advantage of multiple sources of financial information and advice—and then decide which to trust and act on. Our own research in the Future of Money Study shows that Gen Zers use a wide range of sources of financial advice. While they assess a wide range of sources of advice, they choose financial advisors as the most trusted source of input for a broad range of personal finance and investing guidance areas.

Understanding Gen Z’s Financial Attitudes 

Gen Zers are focused on planning for their futures while also being mindful of their daily expenses and short-term needs. This generation is very cautious and resourceful in their approach to their finances and wary of overspending and debt. This is unlike the Millennial generation—who are seen as not able to catch up to where they “should be” due to overwhelming debt and a series of unfortunately timed economic events at critical points in their lives. As we discuss in The Financial Brand, Gen Z has been influenced by cautionary tales and a desire to avoid the financial challenges faced by previous generations. They are looking for trusted advice to help them avoid pitfalls and make good financial decisions.

Gen Z and Trusting Advice from Friends and Family

Gen Z crowdsources advice—looking at multiple inputs—but friends and family are very important. According to Logica’s Future of Money Study, almost half of Gen Z (47%) prefer to get financial advice from family and friends–compared to other sources like financial institutions or advisors. This makes sense given their age and life stage, but it’s also more than that. They value the insights and experiences shared within their extended networks. When we dig into this more in our qualitative research with this generation, we see that Gen Z is collecting information from across their network. They apply a broad definition to “friends,” which includes people they are connected to online as well as close friends and family.

Gen Z also makes choices on whom they trust for which kind of advice. For example, they may go to their parents for help signing up for a 401k but look to online friends and conversations for tips on investing–considering advice from those who they trust the most for a particular topic. Specific areas where they tend to look to friends and family–but where advisors are still considered as trusted–include creating a budget (27%), knowing how much to save to meet goals (23%) and knowing what type and how much insurance to have (22%).To learn more about these specific areas, you can sign up for Logica’s upcoming webinar “Money Conversations with Gen Z.”

Gen Z and Trusting Online Advice

We see the lines are blurred between friends and family and social media for Gen Zers, and this generation uses social media more than other generations when it comes to financial advice. As we previously mentioned in Advisorpedia, Gen Z relies on social channels like YouTube, TikTok and Instagram for advice, while still wanting professional input. Despite being immersed in the digital social world, this generation is not yet trust AI for financial advice and planning.The Logica Future of Money Study also found that Gen Zers trust financial advisors significantly more than they trust AI for advice in every area.

 The Role of Professional Financial Advisors for Gen Z

While Gen Z turns to friends, family and social media for money matters on some fronts, financial advisors play a key role in helping guide this generation in their decisions about money.   Across a range of 13 areas of advice tested in the Future of Money Study, Gen Zers trust professional financial advisors over family and friends on most attributes, and they trust financial advisors over AI on all of the 13 areas.

The top 5 areas where Gen Zers trust financial advisors over family and friends are: when to buy or sell investments (41%), selecting investment options that align with financial goals (41%), and understanding the basics of how to invest (40%).  Areas closer to personal finance such as creating a budget or knowing how much to save tend to be more closely tied with family and friends.  We dig into the leading areas for financial advice from financial advisors in our upcoming webinar “Money Conversations with Gen Z.”

Trust is a key factor influencing Gen Z's money choices. Financial advisors and financial institutions will need to reach this generation through their personal networks and social media, but trust will be built with personal connection and credibility of a professional financial advisor.  Want to learn more about Gen Z and the Future of Money? Sign up for Logica’s upcoming webinar on this topic.

Related: The Reshaping of Money Management Attitudes