Lifelong Relationships Make a Difference

What You Need to Know

Gen Z is entering the workforce now.
The current median net worth of Americans under age 35 is $13,900.
About 44% of Gen Z adults and 43% of millennials say they are likely to work with financial advisors.

From the COVID-19 pandemic to inflation and instability created by the crisis in Ukraine, the last few years may have left many feeling even more uncertain about the future and their financial security.

Financial security and success can come in many forms for different people — from paying off debt, to saving for retirement, to buying a home.

Most can trace their security back to the foundation provided by sound financial planning. Whether it is deciding whether to take out a student loan, saving for a down payment on a house, or figuring out the best way to save for retirement, people make major financial decisions at all stages of their life.

Too often, these decisions are made alone.

On Their Own

We’ve seen the effects of this on retirement planning.

According to the Government Accountability Office, nearly 40% of Americans participating in a 401(k), many of whom have had little to no financial coaching, say they don’t understand the fees associated with their retirement plan.

We’ve found ourselves in this situation, partly because financial professionals, those with the qualifications and knowledge to guide important decisions, are not able to make their services accessible to people early in their lives.

Younger people, with less time to amass it, typically have less wealth. Data from the Federal Reserve shows the median net worth of individuals under 35 sitting at $13,900.

We Can Help

According to Investopedia, financial professionals at most institutions will have an established threshold for the minimum amount of assets available for a person to be taken on as a client; for some organizations, that minimum amount could be set higher than $100,000.

Waiting to talk to people once they have accrued significant assets may prevent financial professionals from creating relationships and providing advice early on.

Many of us may hold old stereotypes that Gen Z consumers and even millennials are too young or at a stage of life that does not yet require financial products and services.

The reality is that Gen Z consumers are a growing part of our workforce and contribute to households financially. They are an important consumer segment for us to consider now and in the future.

Research backs it up.

According to Pew Research Center, about seven in ten (72%) Americans think young adults have a more challenging time saving for the future than their parents’ generation did. Nearly as many believe younger generations have a more difficult time buying a home or paying for college.

Most people wait until they have assets to invest when they could use help earlier in life to establish goals and determine insurance needs.

The Cradle-to-Grave Strategy

At my organization, we have a goal of helping people earlier in their lives, creating more of a cradle-to-grave relationship to combat this gap.

And for people who are not yet ready to start a relationship with a financial professional, we’ve invested in a “virtual finance coach” program to help members not yet requiring investment guidance but who are open to learning how to get out of debt, set up an emergency fund or improve their credit

It all starts with financial education; there’s not nearly enough of it in this country, especially for children growing up in low-income families.

Professionals can play a crucial role in addressing the economic divide by building long-term relationships with their clients and widening their net to include those that need help with financial planning, not just in the buildup of their assets.

The data collected as part of the same Federal Reserve’s Survey of Consumer Finances further illustrates this problem; across all demographics, the percentage of white (51%), Black (31%), and Hispanic (26%) families under the age of 35 with a retirement account is too low.

Conducting research that encompasses a wide range of racial and ethnic identities and looking at consumers from Gen Z through baby boomers provides a more precise and vivid picture that represents the communities we serve.

At my organization, we believe a brighter financial future should be accessible to everyone.

We can only achieve that by centering our customers and evolving with consumers to meet their needs from the beginning.