Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Dinon Hughes

Practice Management > Building Your Business > Young Professionals

What Advisors Can Do for Gen Z Right Now

Your article was successfully shared with the contacts you provided.

What You Need to Know

  • Many Gen Zers started to invest before age 20, Schwab's new Modern Wealth Survey shows.
  • They haven't had a reason to seek professional advice yet.
  • But that will change, and you can lay the foundation now.

The next generation has taken up investing sooner and on a greater scale than previous generations.

In the latest Charles Schwab Modern Wealth Survey, results show that members of Generation Z, generally considered those born from 1997 to 2012, are benefiting from increased financial education, widespread market information and online trading that has expanded access to everyone.

As a member of Gen Z myself, I picked up investing at the ripe age of 17, before I was even able to legally open an account in my name. My high school’s required economics course had a semester-long project called “The Stock Market Game” in which teams across the state were given a mock $100,000 portfolio to invest for the largest return. I won and have been hooked on investing ever since.

According to Schwab’s survey, Gen Z is light years ahead of prior generations, with the average investor starting at just age 19 compared with age 25 for millennials, 32 for Gen X, and 35 for baby boomers. While impressive, the statistic on its own is misleading. As others in Gen Z who have yet to start investing begin later in life, this average age will increase.

The overall uptake of investing in my generation is impressive already. Sixty-three percent of baby boomers, the oldest generation surveyed, are investing. Gen Z, whose respondents in this survey range in age from 21 to 26, is close on the heels of older generations with 45% already investing. Millennials fall in between the two with 54% investing, and Gen X with 58% investing.

This coincides with a general increase in investors across the United States as entry barriers have dropped significantly. Per the most recent Federal Reserve data, which Schwab’s survey matches, 58% of Americans — the highest proportion in history — have investments.

What’s different about this generation? Gen Z doesn’t remember tough economic times. Of course, each person’s upbringing is distinct, but the vast majority of this age group was either not born yet or too young to remember the economic devastation of the global financial crisis of 2007-08, let alone the dot-com bubble and ensuing events of the late 1990s into the early 2000s. Their memory spans only the expansionary decade following the Great Recession and the COVID-19 cycle of the past four years.

So how do advisors appeal to a younger generation taking up investing in droves?

As difficult as it sounds, you probably can’t at the moment.

Why? Because they have yet to experience a reason they can’t do it themselves. Again, there will always be outliers, but this generation by and large didn’t grow up with a broker or advisor. They are more than three times as likely as boomers to have learned about investments in school (28% versus 9%), and over twice as likely as boomers to say they learned about investing at a young age (43% vs. 18%). They were taught self-management, which has worked thus far.

Self-management will prove to be a double-edged sword for Gen Z. Schwab’s survey shows that they have found it easy to access investments through commission-free trading and openly available company research. But with expanded access comes expanded attention.

When tracking your net worth is readily available in the palm of your hand, it can take up an increasingly large portion of your attention. This is exacerbated as net worth grows. Eventually, there will come a point at which their assets grow too large to confidently manage on their own. For DIY investors where this point never comes, they would never become clients regardless.

What can you do today then? Lay the foundations.

For existing clients, offer to speak with their children or grandchildren as they start their careers. You are not trying to win their business; you are there as a knowledgeable resource. If they have already started investing, commend them on taking it upon themselves and ask what their experience has been so far. You are starting discussions to prevent future attrition when assets are passed on to them.

If you can help set their financial foundation, through investing or otherwise, that is the cherry on top.

Dinon Hughes is an advisor with Nvest Financial, an RIA based in Portsmouth, New Hampshire.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.