Gen Z Investors Are Here—Are Financial Advisors Prepared? (2024)

The cost of living in America has skyrocketed. According to the Bureau of Labor Statistics, the Consumer Price Index increased 4% for the 12 months ending May 2023. As everyday goods and services become increasingly expensive and the Fed tries to thread the needle between stemming inflation and avoiding a recession, Americans are rethinking how they can plan and save for their future.

This is especially true for Gen Z, a generation that has grown up watching their parents struggle through some of the largest economic crises in history. From the 2008 recession to the aftermath of the global COVID-19 pandemic, they’ve learned valuable lessons about the importance of planning ahead.

Related: Focused on the Future: Kristi Rodriguez on Redefining Retirement, Attracting Gen Z and Making an Impact

In fact, Gen Z is earning more, saving more and investing earlier and at a higher rate than previous generations. According to a recent Vanguard report, Gen Z is more invested in stocks than any other previous generation. Additional data from theTransAmerica Center for Retirement Studiesshows over 30% of Gen Z is prioritizing retirement savings, and67%of those that have been offered an employer-sponsored retirement plan are saving for it.

As Gen Z puts a big emphasis on investing in their futures, so must the advisors who serve them. To capture this new wave of clients, financial advisors and wealth management firms need to understand the investment needs of younger generations and the best way to help them reach their goals.

The Gen Z Investing Mindset

Related: Wealth Manager Is Building Advisory Team to Assist Gen Z Heirs

It is a misconception that Gen Z investors have little interest in traditional investment products and would rather chase trends driven by social media or invest in bubble assets like NFTs. In fact, a recent report from the Financial Industry Regulatory Authority and the CFA Institute found 41% of American Gen Zers have money in individual stocks and 35% invest in mutual funds. Furthermore, Vanguard found in a recent study that Gen Z's 401(k) participation rate in 2021 was 62%, more than twice the participation rate for similarly aged employees in 2006, which was 30%.

Like many of their millennial predecessors, they view their money as a way to influence the world around them. It used to be that you had to choose one: either invest for returns or invest for impact. But times have changed: 40% of Gen Z say their investment decisions are driven by “companies with a purpose.”

Gen Z—also known as iGen—is the first generation to grow up with technology in the palm of their hands. In the past, financial advisors were among the few sources of investment advice and guidance; now young investors know how to source information from all corners of the internet. According to a survey from, Gen Z investors are up to five times more likely to seek investing tips on social media compared to adults aged 41 and over, and nearly 1 in 3 turned to both friends and online influencers for guidance.

As digital natives, Gen Z also expects a more digital-focused and hyper-personalized investing experience. In fact, it is estimated that in 2030 up to 80% of new wealth management clients will want to access advice in a “Netflix-style” model that is data-driven and hyper-personalized.

It used to be advisors would provide clients with pre-packaged model portfolios and funds because it was efficient, and custom portfolios were cost prohibitive. But technology has caught up and younger generations now expect a data-driven, bespoke investing experience that is oriented toward their specific needs.

How Advisors Can Better Serve the Next Generation of Clients

Younger investors want personalized service and someone with deep knowledge of the asset classes and investment strategies most important to them. And while this once was viewed as impossible, advisors now have the technology and resources to make it a reality for their clients.

To help better serve the new generation of investors, advisors can do three things:

  1. Upgrade Your Tech Platform: Younger investors are used to having everything at their fingertips, and digital platforms help clients stay connected to their accounts and engage with their advisors anytime from their phones. Advisors should also take the extra step to apply their practice’s unique branding to the portal to support their marketing ecosystem.
  2. Embrace AI: Artificial Intelligence is more than just a buzzword—it’s the tool that will change how people, businesses and technology interact with one another. For advisors, it should be viewed to strengthen client relationships given it can help cut down on the amount of time it would take them to do certain tasks, like drafting emails and conducting research, leaving more time to focus on serving clients.

    Should advisors worry that AI may replace them at work? While AI can help take on repetitive job functions or time-consuming tasks, it can’t replace the human element of an advisor-client relationship.

  3. Be open to outsourcing: Outsourcing is a fast-growing trend for entrepreneurial advisors who want to serve the increasing demands of investors while growing and scaling their businesses. When advisors outsource key parts of their technology or asset management, for example, they can strategically redeploy that time on value-added activities like engaging with clients.

    According to AssetMark’s Outsourcing survey, 98% of advisor respondents said outsourcing allows them to deliver better investment solutions, and 91% have achieved accelerated growth in total assets as a result of outsourcing. Eighty-three percent of advisors reported that outsourcing has enabled them to strengthen client relationships, and 95% percent of respondents have a better work-life balance due to outsourcing.

The investment landscape continues to evolve, and financial advisors and wealth management firms need to continue to evolve with it. By tapping into outsourced resources and technology like AI as well as learning what Gen Z want from their investments, advisors can focus on delivering what younger generations expect—digital, hyper-personalized experiences that help them reach their financial goals.

Natalie Wolfsen is the chief executive officer at AssetMark

As an expert in finance and investment, I bring a wealth of knowledge and experience in understanding the intricacies of the current economic landscape and the evolving trends in investment behavior, particularly among younger generations like Gen Z. My expertise is rooted in extensive research, industry analysis, and hands-on experience in navigating the complexities of the financial markets.

Now, let's delve into the key concepts discussed in the provided article:

  1. Rising Cost of Living and Inflation:

    • The article highlights the Bureau of Labor Statistics' data indicating a 4% increase in the Consumer Price Index for the 12 months ending May 2023. This points to a significant rise in the cost of living in America, affecting everyday goods and services.
  2. Gen Z Investment Trends:

    • Gen Z, having witnessed economic crises such as the 2008 recession and the global COVID-19 pandemic, is portrayed as a generation that values planning for the future. The article emphasizes that Gen Z is earning more, saving more, and investing earlier and at a higher rate than previous generations.
  3. Investment Priorities of Gen Z:

    • A Vanguard report mentioned in the article reveals that Gen Z is more invested in stocks than any other previous generation. Over 30% of Gen Z prioritizes retirement savings, with 67% of those offered an employer-sponsored retirement plan actively saving for it.
  4. Gen Z's Socially Responsible Investing (SRI) Approach:

    • Gen Z investors are shown to be socially conscious, with 40% stating that their investment decisions are influenced by "companies with a purpose." This reflects a shift from traditional investment motives, as they seek both returns and impact.
  5. Digital Natives and Investment Information:

    • Gen Z, also known as iGen, is depicted as the first generation to grow up with technology, enabling them to source investment information from various online platforms. Social media, friends, and online influencers play a significant role in their decision-making process.
  6. Expectations for Digital-Focused Investing:

    • The article predicts that by 2030, up to 80% of new wealth management clients will prefer a "Netflix-style" model for accessing advice—data-driven and hyper-personalized. Young investors expect a more digital-focused and personalized investing experience.
  7. Advisors' Response to Changing Investor Expectations:

    • To better serve the next generation of clients, financial advisors are advised to upgrade their tech platforms, embrace artificial intelligence (AI), and consider outsourcing certain tasks. Personalized service and a deep understanding of the asset classes important to younger investors are emphasized.
  8. Role of AI in Financial Advisory:

    • The article emphasizes that AI is not just a buzzword but a tool that can enhance client relationships by reducing the time spent on repetitive tasks. It highlights the role of AI in tasks such as drafting emails and conducting research, allowing advisors to focus more on serving clients.
  9. Outsourcing in Financial Advisory:

    • Outsourcing is presented as a growing trend among advisors, enabling them to meet increasing investor demands while scaling their businesses. The benefits of outsourcing, including improved investment solutions, accelerated growth, and better work-life balance, are highlighted.

In conclusion, the article underscores the need for financial advisors and wealth management firms to adapt to the evolving investment landscape, especially in catering to the preferences and expectations of the tech-savvy Gen Z investors.

Gen Z Investors Are Here—Are Financial Advisors Prepared? (2024)


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