Four Opportunities Generation Z Creates for the Wealth Management Industry

Your clients are growing older, and someday their wealth will transfer to their children and grandchildren. The question is, what are you doing now to attract the next generation of wealth builders to your firm? One of the biggest reasons advisors lose generational clients is because you haven't been introduced to the family. Establishing a direct relationship with Gen Z before they are in a position to control wealth or make big financial decisions is key to overcoming this reality. By putting yourself in front of them now, they’ll be much more likely to engage with you as their advisor in the future.

Because business is going well today and you feel a connection with your current clients, it’s hard to see how neglecting the next generation of wealth builders is potentially locking in future losses.? As an advisor, your focus should be on establishing a suite of services that will address your future clients' needs — and then using those services to attract and serve the next generation.

Here are four opportunities that engaging with Gen Z creates for advisors, and what you can do to maintain a competitive edge in the evolving wealth management landscape.?

Opportunity #1: Preserving Generational Wealth

You may be familiar with the saying, “shirtsleeves to shirtsleeves in three generations.” It’s a common cautionary tale for wealthy families — referencing the concept that by the time family wealth has reached the third generation, it’s almost always gone.

Why does this tend to happen? Grandparents (the first generation) work hard for their wealth and build a sizable fortune from the ground up. Their children may see their parents working hard for their wealth, but they may not fully appreciate the work that goes into preserving it. By the time their children’s children come around (the third generation), the wealth is often taken for granted and spent irresponsibly.

This isn’t just an old adage, it’s based on reality. According to Nasdaq , around 90% of wealthy families lose their wealth by the third generation. Unsurprisingly, this leads 78% of wealthy families to not trust their children with an inheritance.

For those clients with Gen Z children or grandchildren, preserving generational wealth is likely a top concern — and it’s a compelling reason for them to reach out to you, their advisor for support.

Opportunity #2: Facilitating Conversations About Finance

What we’ve established so far is that there’s often a distinct lack of trust between parents and their children or grandchildren when it comes to maintaining generational wealth. As your client’s trusted financial partner, they may feel most comfortable turning to you, their advisor, for help bridging the gap between their family and their finances.

Interestingly enough, the Covid-19 pandemic actually pushed more parents to talk to their children about money. In a recent survey , 35% of respondents said they were more likely to tell their kids about their past financial mistakes and 30% said they were more open to talking about the family’s financial situation than they were before the pandemic.

While it’s encouraging to see that more parents are willing to have the “money talk” with their children, that doesn’t mean they necessarily know how to go about it. Parents want to help their kids learn key financial principles and develop healthy financial habits, but they may not be comfortable facilitating these conversations themselves — or may feel like they lack the resources and know-how to do it. In fact, more than four in five Americans (82%) are looking for additional resources to help teach their children about good financial habits.

As their advisor, this is an opportunity for you to help your clients address their concerns and increase their children’s financial knowledge — all while engaging with the next generation of investors.

?Opportunity #3: Improving Financial Literacy

Parents aren’t the only ones focused on providing financial education opportunities for their children. Gen Z’ers themselves are interested in increasing their financial knowledge as well. Around 54% of Gen Z is already investing — and they aren’t shy about exploring all options. Gen Z is invested in everything from mutual funds and ETFs to crypto and NFTs. A big driver of this early-in-life investing interest appears to be the increase in accessibility to fintech platforms. With the recent rise in robo advisors and digitally driven trading apps, online transactions are easily accessible and have minimal initial investment requirements.

But what, exactly, are they doing to improve their financial knowledge? Most are turning to the internet for answers. Around 28% of Gen Zers use social media to gain financial insights, as compared to 17% who obtain financial knowledge through formal educational settings. Yet, more than half of Gen Z doesn’t feel confident in their financial acumen, and they’re aware that the information found online isn’t always accurate or reliable — but discerning facts from falsehoods is a challenge.?

As an advisor, you have an opportunity to empower young investors with reliable educational resources while cautioning them about the potential problem sources of information such as with “finfluencers” on social media.

Opportunity #4: Address Family Finance Gaps

Your clients want a comprehensive financial services experience from you. They’d rather have a family finance offering that can help them and their children achieve their goals and objectives, as opposed to turning to other fintech offerings on the market.

Gen Z parents are turning to their current financial institutions, including your firm, to help them fill the gaps in their family’s financial landscape. As the next generation of investors starts to find their financial footing, offer them the suite of services and tools needed to address all aspects of their wealth —? so they don’t have to piecemeal financial solutions on their own.

Embracing the Challenges and Opportunities of Working With Gen Z

It’s clear that Gen Z craves greater access to both financial solutions and financial education. To accommodate the desires of this up-and-coming generation, the wealth services industry must respond with innovative,? impactful, and powerful solutions that can attract and retain the next generation of advisory clients.?

As an advisor, it's essential to speak Gen Z's language by engaging them within the digital world they grew up in. This isn't just about communicating information — it's about immersive, meaningful engagement that ensures advisors can intimately and authentically resonate with younger clients.?

At Goalsetter, we address the concerns of your clients today and their next generation of wealth leaders. How? By helping children understand key financial education concepts in order to become the savvy savers and educated investors of the future.?

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