Financial advisers are increasingly trying to attract younger clients, but many say Gen Z is proving a difficult generation to tap into.
Despite their young age – the oldest are around 27 – there are many Gen Z-ers who would benefit from financial advice. For one, they’re a generation set to inherit billions of pounds by the end of the decade in what has been dubbed the ‘great wealth transfer’. Many will already be beneficiaries, as older generations have started gifting inheritances early ahead of pensions being brought into the scope of inheritance tax.
If I could see on paper that I’d spend £XXX on adviser fees but it would save me £XXXX, that might convince me
However, even for those of them not inheriting wealth, Gen Z-ers are a cohort more fixated than ever on getting rich quick. More than a fifth of young people (21%) say their main career goal is reaching financial freedom as soon as possible, compared to just 4% aiming to reach a senior leadership position, according to a survey by Deloitte.
Advisers could help those young people make their money work harder to meet their dream of financial independence more quickly.
Yet, the number of Gen Z-ers seeking financial advice remains low, with many young people turning to social media for financial help instead.
One study by Credit Karma has found that more than a third (36%) of Gen Z relies on ‘finfluencers’ as the main source of financial information, while fewer than one in 10 would speak to a professional for help.
I just want to pay a one-off fee when I need help
So, how can the advice profession attract potential Gen Z clients, and what are the barriers stopping young people from engaging with an adviser?
Demonstrating value over up-front cost
Young people face considerable financial pressures compared to previous generations, with high rents, house prices and general living costs, plus, for some, huge student debt. This is leading many young people to cut back on other costs – and could mean they are less willing to pay for services like financial advice.
Hannah Brown, a 27-year-old solicitor from London, is on the fringe of the Gen Z generation and says she would not consider using an adviser because the costs are so prohibitively high.
People engage with influencers on platforms like TikTok because they’re relatable and trying to help everyone rather than just rich people
“When I’ve worked it out, I’d end up spending thousands of pounds on something I can’t even see, and I just feel like I could get much cheaper help elsewhere,” she explains.
When asked what would persuade her to use a financial adviser, she says she would prefer to pay one-off sums rather than commit to paying an ongoing fee.
Capturing Gen Z with protection? The industry needs to innovate
“I think firms should offer more fee options or cheaper flat rates to engage younger people. I just want to pay a one-off fee when I need help.”
Brown adds that she would find it helpful to see a breakdown of how much an adviser could save her.
Financial advice just seems kind of stuffy; I think it has that kind of reputation
“The problem is knowing it will cost me thousands of pounds but I’m not really sure why I’m spending that money. If I could see on paper that I’d spend £XXX but that would save me £XXXX, that might convince me.”
Get into social media
Social media is a huge part of young people’s lives and is a trusted resource for information, including for financial guidance.
Brown says: “Financial advice just seems kind of stuffy; I think it has that kind of reputation. People engage with influencers on platforms like TikTok because they’re relatable and they’re trying to help everyone rather than just rich people.”
To connect with young clients, experts say advisers need at least to make sure they are visible on social media, or, even better, to engage with it on a regular basis.
Firms should offer more fee options or cheaper flat rates to engage younger people
A recent study by BlackRock found that 79% of Gen Z adults had accessed financial advice through social media, while 27% said they wouldn’t even consider a financial professional who didn’t have a social-media presence.
BlackRock head of business consulting Katie Cullen says: “As advisers’ ageing clients transfer their assets to the next generation, advisers’ presence on social media is undeniably critical to the future of their business.
“Capturing the attention of your target audience and building rapport can be easy when you show up where they are most comfortable.”
Build relationships with the descendants of existing clients
With many Gen Z-ers inheriting significant wealth over the next few years, engaging with clients’ children or grandchildren now could lead to them becoming clients down the line – but research suggests advisers aren’t interacting with inheritors until the actual wealth transfer happens.
I’d end up spending thousands of pounds on something I can’t even see, and I just feel like I could get much cheaper help elsewhere
Warwick Bloore, senior specialist at Vanguard’s adviser research centre, says many advisers are neglecting these relationships early on, so are not giving young people a good reason to use their services later.
“As the great wealth transfer gets under way, advisers who find a way to engage with the next generation in the right way and at the right time will enjoy a considerable advantage,” he says.
Laura Purkess is a freelance financial writer
