Next Gen Investors

The media has discussed next gen investors in a number of articles in recent years as the future of financial advice. These next gen investors include both millennials and Gen Z. The oldest millennials will be turning 41 this year and Gen Z is defined as those ranging in age from their late teens to their mid-20s.

According to data from 2021, there are 72 million Millennials in the U.S. making them the largest generation, surpassing Baby Boomers. The survey indicated that there were about 69 million members of Gen Z as well. These next gen investors will soon become the dominant groups of investors and will shape the investment landscape in the U.S. for years to come.

A survey by Natixis Investors indicated that Millennials with investable assets of $100,000 or more are the most likely group to use a financial advisor at 75%. This compares to Baby Boomers at 70% and Gen X at 67%.

What differentiates Next Gen investors?

Unlike any generation of investors before them, Millennials and Gen Z investors are the most globally connected generation of investors. This is especially the case with the younger Gen Z investors.

Additionally, next gen investors are more racially and ethnically diverse than prior generations of investors. More Millennials are first generation immigrants than previous generations, with a high percentage of Gen Z being the children of immigrants.

Social media is a big part of this generation’s lives and they get much of their information and news about a lot of topics this way. This includes financial and investing as well in many cases.

Gen Z was hit extremely hard by the pandemic. According to one study, over half of older Gen Zers reported that someone in their household either lost their job or experienced a cut in pay due to the pandemic. The percentages for Millennials, Gen X and Baby Boomers were a bit lower. This is a similar experience to what Millennials experienced during the Great Recession of 2008.

Advancements in Technology

Advances in technology have made investing more accessible for Millennials and Gen Z at an earlier age than with past generations. Gen Z especially has taken advantage of robo advisor platforms and other online platforms like Robinhood.

What factors influence their investment strategies?

Many next gen investors invest based on their values. This may be in the form of ESG based investments, or the avoidance of companies whose business model they feel runs contrary to their values. This isn’t to say that older investors do not invest at least in part based on their values, but this is very prevalent among Millennials and especially Gen Z investors.

Another area where next gen investors differ from many of their older counterparts is their interest in digital assets like Bitcoin and cryptocurrencies.

Next Gen Preferences: Robo Advisors vs Financial Advisors?

Next Gen investors, especially Gen Z, are often drawn to robo advisors or apps like Robinhood. These investors were raised in a digital world so taking a digital approach to investing is a natural path for many of these young investors.

Many robo advisors offer access to quality advice via algorithms based on sound investment principles on a 24/7 basis.

It is, however, a misnomer that Millennials do not want the advice of human financial advisors. In fact this generation has taken the lead in engaging the services of financial advisors as the older Millennials are now in their early 40s with retirement and other major life goals in place.

Millennials often have a different vision of working and retirement than their parents. Many in this group envision retirement, or at least semi-retirement in their late 50s versus working well into their 60s as prior generations have traditionally done.

The Natixis survey indicated that 82% of Millennials felt that time spent with a financial advisor is an important component of their planning.

Attracting Millennial and Gen Z investors can be a challenge for advisors. Experts in this area suggest engaging them in ways that are comfortable for them, including:

  • Advisors should develop a digital presence and provide next gen investors with informational content tailored to them.
  • This content should be focused on a single aspect of their financial planning and investing. Content that tries to “do it all” in one step can be overwhelming and turn these younger investors off.
  • This content should try to help advisors engage with this generation on issues of interest to them like socially conscious investing.

Gen Z and Millennials are the next generation of advisor clients. Wedbush financial advisors are very interested in working with this generation of investors and are eager to help them achieve their financial goals.



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