Gen Z refers to those individuals born after 1997 (it’s still unclear when Gen Z ends.). These individuals are still relatively young and most financial advisors don’t really think that they should focus on Gen Z.  But Gen Z is just beginning to join the work force and will be the investors of the future.  Understanding what drives them at a young age will allow financial advisors and providers to develop the products and services that will attract a new generation.

Spectrem Group recently conducted research with Gen Z individuals whose parents had more than $100,000 of net worth.  The goal was to gain an understanding of how these young people view investing and what are their goals for the future.

In reviewing the information Spectrem found that half of Gen Z between the ages of 25-26 receive no financial help from their parents while 45% continue to receive some help from their parents.  As age decreases, not surprisingly, reliance upon one’s parents increases.  It’s interesting to note, however, that 61% of Gen Z already has an investment account.  Forty-five percent have a financial advisor, often the same advisor as their parents.  Seventy percent of Gen Z expects an inheritance in the future.

For those financial advisors seeking to attract Gen Z investors, what are the factors that matter the most to Gen Z investors?  The same criteria that is important to older investors is important to Gen Z investors.  Forty-four percent seek an individual that is perceived as honest and trustworthy.

Younger investors are also very open to financial and retirement planning with 44% indicating they are interested in a financial plan and 43% identifying retirement planning as a need.  Both of these services are ranked higher than investment advice for Gen Z.

 

Keep in mind the following to successfully attract Gen Z investors:

 

1.       Seek to develop a relationship with the children of existing clients.  One of the ways to develop a long-term relationship is to assist young people as they are beginning to sort out their finances both as they attend college and as they transition into the workforce.

2.      Use social media and online tools to attract and inform young investors.  Because they are comfortable with anything online, the ability to make access to information and services easy to use will be attractive to this generation.

 

3.      Provide financial planning and retirement planning that appeals to young investors.  While their goals and investment choices are very different than that of older investors, by assisting in the initial development of a plan an advisor can develop a very loyal relationship with an investor.