How to plan 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

The average student debt per borrower aged 25-34

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 struggling to see their wealth potential. They'll also want to buy houses, start businesses, and more.

A financial advisor who can help young investors strategically approach current and future debt can gain a lot of trust. As these investors advance in their careers, they're likely to continue to turn to their financial advisor to help them grow their wealth.

2.    They're seeking balance

The ups and downs of the last 20 years have trained many Gen Zers to be realists. 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. Similarly, they know markets can be volatile, but trust in rebounds.

A financial advisor can help them see the financial implications of their decisions and find the balance they're seeking. Maybe they put more time into their careers now so that they have the financial flexibility to make choices later. A practice that takes a holistic approach to financial planning and makes time to help young clients weigh different priorities will be invaluable to Gen Z.

3.    Socially responsible investing is a priority

Gen Z riding bike and thinking of socially responsible investing

The reports on Gen Z investing in ESG stocks are mixed. Younger investors are skeptical that profit is the only responsibility of a company. They see signs that purpose-driven companies perform well over the long term and worry about the financial health of global markets1.  However, a 2021 Motley Fool survey finds that ESG stocks haven't caught on as strongly as expected. About 25% of Gen Z and millennial survey respondents reported owning ESG stocks, and a third weren't even familiar with the term2

The fact is, all generations are interested in socially responsible investing right now , and younger investors will likely continue to lead this trend3.  Advisors who do their research, offer transparent options that meet a range of goals, and lead with values will 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 weren't the only ones to get swept up in the meme stock phenomenon, but they are more likely to seek get-rich-quick stock schemes, according to a 2021 Barclays survey4

However, a majority of Gen Z investors are reluctant to invest and lack confidence in their financial futures5

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 seeking 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

illustration of Gen Z and advisor working together

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. That doesn't mean they don't need 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

Consider a custodian that invests in your success. If you're thinking about becoming an independent advisor, contact us to learn more about the benefits of a Schwab custodial relationship.



1 MarketWatch, "As boomers hand over the keys to the stock market, sustainability-minded younger investors let their consciences lead," 2020.
2 The Motley Fool, "Study: What Are Gen Z and Millennial Investors Buying in 2021?"
3 CNBC Make It, "Millennials spurred growth in sustainable investing for years. Now, all generations are interested in ESG options," 2021.
4 Markets Insider, "Gen Z investors are taking more risks, picking up bad investing habits in the hunt to get rich quick, survey finds," 2021.
5 IR Magazine, "Retail investors: Gen Z more cautious than millennials, shows new study," 2021.