Planning for the rise of Gen Z

Gen Z—those born between 1997 and 2012—will approach investing differently than millennials, Gen Xers, and baby boomers. Why is that important? Besides the fact that this pool of investors is poised to grow year by year, they're also the children and grandchildren of your current clients. By tuning into the concerns of the next generation and offering to help, you can cement a family's bond with your firm.

Here are five ways you can serve Gen Z now (and strengthen relationships with the whole family).

1. Debt management can open doors

Four-year college tuition has been in the six figures for a couple of decades now. Law and medical school costs are even higher. Many graduates with high earning potential are feeling burdened by student loans and personal debt, causing them to struggle to see their wealth potential. They'll also want to buy houses, start businesses, and more.

A financial advisor who can help their clients' children or grandchildren strategically approach current and future debt can gain a lot of trust with the whole family. As these young adults advance in their careers, they're likely to come to you for help growing their wealth.

2. They're seeking balance

The ups and downs of the last 20 years have led many Gen Zers to prioritize personal growth and mental well-being.² Like previous generations, Gen Z wants to find meaningful work that does good in the world, but they understand that they'll likely have to make compromises. They know markets can be volatile, and are hesitant to set long-term goals, but they are interested in investing and are engaged in "soft saving," or saving for today's goals.³

A financial advisor can help them see the financial implications of their decisions and find the balance they're seeking. Maybe they create a savings account for travel or experiences they're excited about now, while also putting money into an IRA. Offering to help Gen Zers take a holistic approach to financial planning and making time to help them weigh different priorities will be invaluable to them and can provide the foundation for a long and profitable relationship.

3. Socially responsible investing is a priority

Younger investors tend to be skeptical that profit is the only responsibility of a company. They back up this view in their shopping habits and interest in sustainable investments.⁴ The "G" in ESG (Environmental, social, governance) is also something on their minds. They worry about the financial health of global markets and put more trust in companies that are well governed.⁵ 

They're not alone. To some degree, all generations are interested in socially responsible investing, and younger investors will likely continue to lead this trend.⁶  Advisors who do their research, offer transparent options that meet a range of goals, and lead with values can appeal to Gen Z and millennial investors who feel their money should do good.

4. Gen Z is getting financial education from memes

Teenagers and twenty-somethings are more likely to seek get-rich-quick stock schemes, according to a 2021 Barclays survey. ⁷ Those who aren’t attracted to memes are often so risk averse they avoid investing entirely.⁸

The root of each problem is the same: A lack of financial education is leading some to wild speculation and others to shy away from opportunities to grow their wealth. An advisor who is willing to take time to fill in knowledge gaps and collaborate on a portfolio that meets a range of needs can help Gen Z investors stabilize their approach and improve their outlook.

5. It's not all about tech

Gen Z expects information at their fingertips, so an online portal is a bare minimum with this group. And they're often very comfortable with robo tools that simplify investing. Yet, despite their comfort with technology, they still want and need advisors like you.

Gen Z understands that life is complicated and that financial decisions are not easy. And they've seen the darker side of technology on social media and in our politics. Gen Z wants what we all want—someone who is patient and knowledgeable by their side to cut through the complexity of life and get them to their goals. As Gen Z's wealth grows, they'll be looking to advisors like you to help them navigate their financial futures.

What you can do next

• Explore the breadth of Schwab's investment product offerings and wealth management solutions to address your clients' unique needs.
• Consider a custodian that is invested in your success. If you're thinking about becoming an independent Registered Investment Advisor (RIA), contact us to learn more about the potential benefits of a custodial relationship with Schwab.