Leave it to the experts: 7 ways advisors can 'finfluence' Gen Z

As I sit in my open workspace — a member of Generation X surrounded by Generation Z colleagues — it's easy to overhear their anxiety-freighted conversations. One talks about how rent currently represents 40% of their take home pay. Another is apprehensive about wages lagging behind the cost of living. Yet another is pessimistic about buying their first home given historically high housing costs, while another, burdened by massive student loan debt, sees such worries as aspirational.

My Gen Z clients are under the same kinds of very real pressures as my colleagues, but such anxieties don't tell the whole story about this cohort born between the late 1990s and early 2000s. This is a dynamic group — financially savvy, digitally fluent and eager to learn.

By adapting your approach to their unique circumstances and offering them the tools and resources they need, you can empower Gen Z clients to achieve their financial goals as you grow your practice alongside them into the future. 

Here are several approaches I've implemented as I offer guidance to Gen Z.

Balance 'finfluencers' with grounded expectations

Most of us have been there — scrolling through social media late at night and getting sucked into the world of fabulous influencers and "finfluencers." 

But Gen Z in particular grew up with social media at their disposal. That's why it's crucial to help them understand that these platforms can be a breeding ground for unrealistic expectations, a condition dubbed money dysmorphia. 

READ MORE: 'Everyone's balling' — but is the industry ready for young wealth?

Many finfluencers paint a picture of investing that is fueled by luxury lifestyles and get rich quick schemes. However, we know the truth: Building wealth takes time and a personalized strategy. 

Social media can be a great starting point to pique your Gen Z client's interest, but it is important that they understand that relying on it solely can lead to misunderstanding, misinformation and, ultimately, unrealistic expectations. It's important to help your Gen Z clients understand that social media offers generalized advice that might not apply to their unique situation. While there is valid advice to be gleaned, they should think of it as a "Dummy's Guide" to get them started with basic financial vocabulary. Help Gen Z understand that financial planning is like finding the perfect pair of shoes — not one size fits all.

READ MORE: CFA Institute report studies finfluencers

Emphasize achievable goals — and keep it simple

When working with Gen Z clients, I emphasize the essentials: spending, saving, emergency funds, expenses and investing. The key is keeping it simple. 

When it comes to overall budgeting, I teach them about the difference between fixed expenses and variable expenses so that they know how much money they have left over at the end of the month. Then, I guide them on the most efficient use of their money, whether it's debt repayment or initiating long-term investments. 

At this stage of the client's life there are often limited extra funds to work with. I frequently advise Gen Zers to use an app to track their expenses in order to identify opportunities to reduce them. In the cause of focusing on small, achievable goals that build investing momentum, I often advise clients to adjust their emergency funds from three to six months of living expenses to two.

READ MORE: Gen Z investors seek advice from friends and family more than from planners

Leverage Roth 401(k) options for tax-advantaged growth

In general, Roth IRAs are a great option for clients who qualify. However, there's a game-changer for Gen Z: the Roth 401(k). 

This option is becoming increasingly available through employers and offers a unique benefit: the ability to contribute post-tax dollars toward retirement savings regardless of income level. 

This means a client can maximize their contributions and enjoy tax-free growth for decades. It's important to note that a Roth 401(k) might not be ideal for everyone, particularly those already in a high tax bracket. However, investing in a Roth 401(k) alongside a Roth IRA can be a powerful strategy, especially if a Gen Z client's employer offers a matching program.

Cryptocurrency: Learn the language

Whether you're a cryptocurrency enthusiast or a skeptic, understanding crypto is crucial when working with Gen Z clients, as many, in my experience, are already invested in it or at least are interested in doing so. 

I've run into many Gen Z investors who are fully invested or have a large portion of their savings in crypto. With such investments becoming mainstream, as evidenced by the recent launch of several crypto ETFs, it's essential that you're able to discuss the pros and cons with clients and whether crypto has a place in their financial plans. 

Educating them on the importance of diversification is key, and using the 2022 bitcoin crash as an example can help you build rapport and facilitate productive conversations about building a well-rounded investment strategy for their future. They'll be more open to your guidance if you can engage with them on their terms.

READ MORE: Bitcoin ETFs bring new questions, worries to advisors

Establish a core account and one for play

Gen Z is a dynamic generation. Where once many expressed interest in commission-free trading apps like Robinhood, I'm now seeing a shift toward established platforms like Schwab or Fidelity. 

These established players offer a physical presence alongside robust online and mobile tools, a combination that provides Gen Z with more investment options, educational resources and professional guidance. As a financial advisor, you can leverage these platforms to manage their core investments effectively.

To foster engagement while managing risk, I often recommend a two-pronged approach. I manage their core investments for long-term financial goals, ensuring stability and security, and they open a separate "play account" with a smaller dollar value of their assets for self-directed investing. This allows clients to explore their interests in a controlled environment and learn from experience, while I continue to oversee their core portfolio. Who knows, maybe they will get lucky, but this approach balances responsible investing with the desire to learn and stay engaged.

Partner with employers on financial wellness

Gen Z places a high value on financial wellness and seeks support from their employers in this area. According to a 2023 Transamerica Institute Report, 77% of workers view financial wellness programs as an important benefit, but only 24% of employers offer them. 

Partnering with companies to offer financial education workshops and resources is a great way to connect with Gen Z and help them build a strong financial foundation. Offering seminars on budgeting, saving, investing and understanding employee benefits can greatly benefit Gen Z employees. These workshops could be conducted virtually or in person, keeping in mind Gen Z's preference for digital interactions. Providing accessible resources such as online financial tools and webinars can also empower them to navigate complex financial decisions confidently.

Consider alternate pricing schedules

Many Gen Zers are early in their income-earning and saving years. As a result, they may want financial advice yet cannot meet asset minimums of traditional financial advisory firms. 

If this is a segment you are serious about serving and growing with, consider using an hourly rate, a flat fee or project fee or a subscription-based fee. All of these will allow you to align your time with the value your Gen Z client seeks.  

The future is bright for the financially savvy, digitally fluent and eager-to-learn members of Gen Z. By adapting your approach and offering them the tools and resources they need, you can empower them to achieve their financial goals while growing your practice alongside them.