Financial Services Trends for Gen Z and What that Means for Financial Pros

The youngest generation in the workforce, Gen Z (cordially called “Zoomers” at times) has a unique set of values that distinguishes them even from millennials. A cohort defined by their love of trends and social media, Gen Z can be an enigma for investors who are attempting to reach younger audiences.

Staying on top of this generation’s ethos and internet habits is crucial for financial services providers. Here, we will take a deep dive into Gen Z financial services trends, including the values that inform their decisions and the types of funds they’re keeping their eyes on—and we’ll explain what that means for your investment advising strategy.

Why does Gen Z investing matter?

Put simply, Gen Z is taking over the world because they know how to make waves in all different kinds of industries. They’re surpassing the impact of millennials, and even surpassing them in size: Morgan Stanley reported that “Gen Z, born between 1997 and 2012, will overtake Gen Y as the country's largest cohort by 2034, ultimately peaking at 78 million.”

Not only are they a sizable force, they’re also the most tech-savvy generation the world has ever seen. Having grown up never knowing life without the internet, this cohort speaks the language of tech fluently and uses it to their advantage.

Older generations are retiring at rates so high that sources have coined the term “The Great Retirement” to refer to this time period. Gen Z will soon make up a far larger cut of the “potential customer demographic” pie for financial providers, so it would be a major mistake to ignore them.

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What values does Gen Z use when investing?

To call Gen Z a political generation would be an understatement. They’ve coordinated national efforts like the gun control organization “March For Our Lives,” and 77% of the cohort said that they’ve attended a protest.

Research has shown that this value carries into their financial practices. According to Morgan Stanley, “90% of Gen Zers believe that companies ‘have a responsibility to address environmental and social issues.’”

However, Motley Fool reported that “25% of Gen Z and Millennials reported owning ESG stocks and 32% reported not knowing what an ESG stock is.” It’s important to note that this data might be skewed by the pairing of two separate generations, but nonetheless, it identifies an opportunity for investment officials to help Gen Z understand how their portfolio could reflect their values.

And, as ESG investing is becoming more common across the generations, it would be a mistake to ignore the Gen Z influence in this trend.

What funds does Gen Z care about?

According to NASDAQ, 73% of Gen Z own stocks, “making them the most common type of investment for this generation.” The same survey found that 15% of the generation’s investors are using ETFs, 30% hold bond investments and 22% buy index funds.

Because of their love for technology, Gen Z are particularly susceptible to newer forms of investing—a whopping 47% of the generation reported owning Crypto stocks.

Gen Z’s spending habits are also changing the game and can be a key indicator for stocks that should be kept on the radar. U.S. News report on a survey of 9,500 Gen Z-ers found that the number one public-owned brand for this group was Starbucks (SBUX) followed by Chipotle Mexican Grill (CMG) and Nike (NKE).

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How can financial advisors serve Gen Z clients?

Of course, one of the biggest things to keep in mind when attracting younger clients is their dependency on the internet for advice and resources. Advertising on social media sites like TikTok can result in a higher influx of Gen Z customers. Companies should assume that this generation will vet them via social media before choosing to give them their business (so it’s important to have professional, clean social profiles across platforms.)

It’s worthwhile to also ensure that whatever investment opportunities are brought in front of Gen Z clients also pass the social media check. NASDAQ reported that Gen Z is susceptible to listening to “Finfluencers” (Financial Influencers) online who promise high returns on certain stocks. This led over 64% of Gen Z members surveyed to fall victim to a “get rich quick” scheme, so the cohort is likely extra wary of lucrative promises.

Challenges with reaching Gen Z clients

Because Gen Z is likely to turn to TikTok or other social media apps as education tools, it’s likely that the historical data of investing could be ignored in favor of new “Finfluencer” ideas. The generation’s trust in online sources could outweigh the trust they place in their advisors, and they might become frustrated if they’re advised against investing in the “get-rich-quick” kinds of returns that are being shown to them online.

For this reason, working with Gen Z means understanding the power of social media at a whole new level. Financial advisors will need to stay up to date on trends and, as previously mentioned, companies will need to have trustworthy presences online.

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Keep up with younger generation investment habits

The newest generation in the workforce will keep their financial advisors on their toes when they double- and triple-check opportunities on parts of the internet that are not normally used to find investment advice. Social media and emerging technology will be an unmissable way to reach and cater to Gen Z.

The “Great Retirement” makes way for an influx of Gen Z and millennial workers to overtake the market, and this cohort’s interest in crypto and other alternative investment opportunities will also change the entire financial industry for good.

The necessary research component for keeping up with younger generations is where it’s helpful to have the right research tools; using analytics and reporting, advisors can stay on top of emerging trends like sustainable investment opportunities or online banking apps that are making waves in society.