Downstream: The Financial Planning Futures of Millennials and Gen Z


If you ask many financial advisors about their ideal client, they’ll describe someone 45 and older. By this stage in life, many clients have been able to accumulate a higher net worth, and they’re in their peak earning years. Add to that the stereotypical intergenerational friction, and many advisors aren’t chomping at the bit to pursue Millennials or Gen Z.

For a moment though, let’s brush aside the headlines and look at the reality on the ground.

The combination of these two factors leaves us with a critical reality: the younger generations will soon have a massive need for sound financial advice and fewer names to choose from.

If advisors want to remain relevant and valuable, it’s time we started looking downstream to the financial planning futures of Millennials and Gen Z.


The Real Gap Between Advisors and Younger Clients

Let’s move this conversation from hypothetical to practical. Let’s start with your business. Who is your ideal client? How old are they? What’s the ideal range for net worth? For many advisors, this looks something like 45 years or older, possibly with a minimum net worth of $500K or possibly $1M-$2M if you’re looking for higher net worth households.

It’s a fairly natural place for advisors to focus. Households who are more established are often likely to be more profitable and less eager to try their hand at DIY investing. They’re (hopefully) old enough to understand the value of looking to the future. It’s a predictable good fit.

Millennials and Gen Z on the other hand have yet to fit some of these important criteria for advisors. They’re still on the earlier ends of their careers. Many are still carrying loads of debt, especially student loan debt that limits their investable income. 

Even still, the wealth advisors are helping their clients accumulate now will be passed on – to Millennials and Gen Z. Between this wealth transfer as well as their own climbing incomes, advisors can’t ignore the coming changes. Your future business needs them as much as they need you.

Preparation means grasping the financial challenges and dreams of these ascending generations. It also means building your credibility now to become a trusted voice as the coming wealth transfer accelerates.


Financial Planning Challenges Millennials Face

The financial trajectory of Millennials has largely been defined by the financial instability and setbacks resulting from the Great Recession of 2007-2009. Much of this generation faced unemployment at a time when they were just starting to enter the workforce. New Millennial workers faced low wages and ended up with an immense loss of earnings.

While you won’t see that cause mentioned in most headlines, you do however see its effects. 

Millennials have been later to arrive at certain financial steps than their predecessors, such as home ownership and paying off debt. 

In recent years, the older generation of Millennials has been able to recoup some of the opportunities that they had lost. Career opportunities have come back, and personal wealth is finally being accumulated. This group has begun to place more intentional focus on traditional financial planning questions like retirement savings, saving for college, and more. 

In fact, Millennials just reached a milestone – for the first time ever, more Millennials own their home than rent. (Albeit at much higher interest rates.)

At the same time, this financial progress looks different for the Millennial generation than it does for older ones. For example, Millennial women are more financially independent, even when married. Another difference is that many Millennials have remained single or experienced divorce at an earlier age. More and more, a “household” does not imply a couple. Even within traditional financial planning questions, norms have changed in many ways.


Millennial Financial Goals

Millennials started their financial lives in the midst of challenges. They commonly postponed common financial steps such as marriage, children, and homeownership. However, in recent years, these things have become a top priority for many Millennials who are now actively seeking to complete these milestones.


Home Ownership

As Millennials begin their families and homeownership journeys, they are looking for guidance and advice. Between the rapid rise in housing prices and historic interest rates, Millennials are looking for guidance on how to attain this important step without over-extending their long-term commitments.


Retirement Catch Up

Especially because of burdens like student loan debt, Millennials have sometimes neglected retirement planning. Having missed a critical window for early compound interest, financial planners should aim to help Millennials see the importance of retirement planning and advise them as they make it a priority.


Preparing For Sudden Wealth + Inheritance

Another area that financial planners should anticipate is inheritance and wealth transfer. In the future, older Millennials will be inheriting trillions. While sudden wealth syndrome is nothing new, it can be one of the biggest challenges to financial health. Planners can build relationships with this generation now in order to help them allocate transferred wealth responsibly in the future.


Financial Planning Looks Different for Gen Z

The generation after Millennials is Gen Z. It is expected that by 2031, the income of Gen Z will surpass that of Millennials. This generation is the most diverse that has been seen in the US, with nearly half of Gen Z made up of racial or ethnic minorities. The demographic change paired with the unprecedented acceleration of technology makes financial planning a challenging topic.


Representation Matters More Than Ever

To begin building trust with this generation, wealth management firms should also place an emphasis on diverse representation on their teams. This is not diversity for the sake of checking a box – Gen Z values a sense of connection with people they feel they can relate to. Culturally, they have developed a sense of expectation for diverse representation, and advisors who acknowledge this with their hiring can position themselves to build trust.


Gen Z Trusts the Online World

Gen Z has also been inundated with technology since day one. The digital revolution has given their generation access to instant information, and it has become an expectation. This has become both a strength and a weakness. 

“Don’t trust everything you read on the internet” is still good advice, but Gen Z is more comfortable than any other generation looking to social media influencers for financial ideas. Add to that the saturation of un-credentialed experts and you have a challenging landscape. They need to have access to advisors they know and trust personally to sort through the buffet of ideas.


Gen Z Financial Goals

While Gen Z is just beginning their financial journey, many on the older side of the generation are already working towards wealth accumulation. They are paying down debt, saving for their education or business ideas, as well as working on investments in stocks, cryptocurrencies, and real estate and towards homeownership.

Those in Gen Z are expected to become the most educated generation yet. Thus, they are prioritizing their education and student debt when it comes to financial goals. However, they are also considering the struggles of past generations when it comes to student debt, and many are opting to forego college due to the financial handicap it often creates.

Gen Z is also staying home longer. While some may categorize this under “failure to launch”, there are also financial benefits. By living with their parents for an extended period of time, they are able to accumulate more wealth and pay off debt sooner, or not accrue debt at all. The goal for many in this generation, after becoming debt free, is to work towards homeownership. These two priorities, debt-free living and homeownership are areas where financial planners can offer advice.


Younger Generations and the Financial Landscape

Financial advisors have long focused on customizing services and advice for each client. They are uniquely capable of understanding each person’s situation and needs in the current financial climate. While the principle is the same for younger generations, the needs are very different.

While both Millennials and Gen Z are open in regard to finances and financial advice, they view financial peace as a form of wellness. Financial planners should transition to fulfill this expectation, offering financial services to aid in the overall well-being of clients.

As Millennials and Gen Z start to make up most of the American workforce, the shift in the financial planning industry grows. Financial planners should begin to reach out to workers of these generations to start building relationships, connecting, and help them get a jumpstart on their financial future.

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