How advisors can reach the next generation of investors

February 16, 2024 8:00 AM

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The "great wealth transfer" is on its way to turning a multitude of young people into wealth holders, and advisors in their turn need to be ready to convert these often-novice investors into new clients.

Among the characteristics of young investors for advisors to note: putting financial security before a happy relationship, wanting capital investments that are in sync with their passions and taking a proactive approach to their own investment future.

Below are five stories that touch on what advisors should know about the emerging class of young investors.

Financial security beats wedded bliss for young people

A more important personal relationship for young people may be with a financial advisor rather than a romantic partner, as many believe financial more than marital wellbeing is the secret to a happy life, according to a MassMutual research study.

"Investing in yourself through wise financial choices today is a commitment younger people can make to secure a more stable financial future," said Paul LaPiana, CFP and head of product for MassMutual.

Additional research findings include the tendency of millennials to seek financial guidance from social media as much as from an advisor, and concerns among all generations that they are not saving enough to retire at their ideal age.

Read more:

Younger generations put money goals before relationship goals

Impact as much as performance matters to Gen Z investors

Advisors wanting to attract the next generation of clients should recognize the importance of impact investing to young people and add charitable planning to their services, according to Fidelity Charitable.

"Though these clients might not necessarily represent a large opportunity in the current wealth segment, as the landscape changes, they're going to become the larger wealth holders," said Brandon O'Neill, CFP and vice president, charitable planning consultant at Fidelity Charitable.

Crucially, as the "great wealth transfer" from older to younger generations takes place, advisors need to manage a concern commonly heard by Diane Manual, CFP at Abacus Wealth Partners: "I don't want my capital investments to work against my charitable investments."

Read more:

The link between charitable giving and snagging next-gen clients

Live music opens up path to financial literacy for LA teens

Embracing the musical tastes of young people could be the blueprint for advisors to teach financial literacy in an engaging way that will help them reach and win the next generation of young investors.

Following a template implemented by the WealthFlix High School Nation Tour in Los Angeles — which combined live music concerts with financial literacy assemblies and curated courses on business and wealth — advisors could forge a crucial connection with their future clients.

"Everyone loves music," said DuQuan Brown, co-founder of Future Media, which helped create online learning and networking platform WealthFlix. "When you have a chance to connect through an experience including music, you can learn anything."

Read more:

What advisors can learn from a music festival teaching financial literacy

Financial education is the common thread for success across generations

Concern for one's financial future is an ever-present theme that links all generations. And so is the solution — financial literacy.

"While there are definitely unique trends for each generation, no matter the age group, we believe that the most important place to start is financial education," says Craig Rubino, head of participant insights, financial wellness and learning for Morgan Stanley at Work.

Financial Planning explored the current financial needs of the different generations — baby boomers, Gen X, young and old millennials, and Gen Z — and what can be done to help each become better equipped to manage their financial situations.

Read more:

From boomers to Gen Z, creating financial wellness at any age

Gen Z investors take the future into their own hands

Understanding the youth of today is a perennial challenge for people of every generation as they get older. For advisors, it's particularly important as Gen Z investors are already showing significant differences in how they approach saving for the future.

"I wouldn't call them sophisticated investors, but they are farther ahead of millennials at the start of their careers," said Andre Jean-Pierre, the founder of Aces Advisors in New York. "They have more exposure to financial markets, whether it be through the news or social media. They understand it better."

Growing up with the internet as their primary source of information, and living through some of the most challenging economic crises in their generation's lifespan, including the dot-com crash and the Great Recession, are some of the key elements shaping the positivity of Gen Z as investors.

Read more:

What makes Generation Z such good retirement savers?