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In ideal world, everyone has need for a registered investment advisor and that demand is linear, or at least easy to forecast, across age, income, marital, racial and other demographic lines.
Advisors know that’s not reality. Fact is some client groups gravitate to advisors more than others. Baby boomers being a prime example. On the other hand, there are segments within the investing public or aspiring market participants that want to work with advisors, but are currently underserved by the industry. Then there are those that need to work with advisors.
Gen Z fits that bill. Yes, they’re young and some were born just a decade ago, meaning they’re not in college, let alone working. But for the Gen Zers – those born in the mid- to late 1990s – they are working and attempting to build wealth. Alone, those two factors are relevant to advisors looking to bolster their ranks of younger clients.
Add to that data indicate Gen Zers legitimately need advisors and that need isn’t just a function of youth so now is the time for RIAs to cultivate relationship with this increasingly important generation.
Surprises Abound With Gen Z
A new WalletHub survey indicates that just 25% of Gen Zers feel financially confident. That’s not surprising because this group is young and it’s impossible to expect those in the middle and at the bottm end of this age bracket to feel financially confident. There are, however, surprises about Gen Z.
“57% of Gen Zers think savings accounts are the best way to invest their money, while 46% of Baby Boomers say investing in stocks is a better option,” notes WalletHub.
Think about that for a minute. Someone in their 60s or 70s is apt to have more confidence investing in equities than people in their 20s. The clients with time on their side aren’t using it to their advantage. Rather, they’re eschewing riskier assets and are being seduced by high-yield savings accounts. Sure, those yields are impressive today, but that’s not a permanent condition and that could be a sign of lost opportunity cost for Gen Z.
There are more reasons Gen Z needs advisors, including the point that many from that demographic believe their parents didn’t do adequate jobs of providing financial education.
“Almost 30% of Gen Zers don’t have a budget for managing their monthly expenses,” adds WalletHub. “Over 34% of Gen Zers say their parents did not set a good example for them financially - more than any other generation.”
For Advisors, Opportunity Abound with Gen Z
There’s ample evidence suggesting advisors, broadly speaking, are either struggling to connect with millennials and Gen Z, or are ignoring doing so. That shouldn’t be the case because it’s bad business.
Look at the opportunity set with Gen Z this way. According to WalletHub, just 21% of Gen Zers polled say they go to an advisor for financial advice, but a staggering 69% rely on family or the Internet for financial guidance.
Bottom line: Gen Z needs advisors and it’s on both groups to capitalize on that need.