The great wealth transfer from Baby Boomers is set to benefit younger generations like never before but the youngest cohort of American adults may find the prospect overwhelming.
An estimated $11 trillion of a total $84 trillion globally is set to land in the accounts of Gen Z (based on Cerulli Associates’ 2022 report) and while this is less than around $30 trillion each for Gen Xers and Millennials, Gen Zs relative lack of financial knowledge could be an issue.
A new survey from Seismic reveals that two thirds of Gen Zs do not feel confident in their knowledge of personal finance, but while 56% of Boomers say they would turn to financial advisors for advice, 61% of Gen Zs would tend to rely on family and friends.
With little more than one third of Gen Zs saying they have worked with an advisor, just 29% having a detailed plan for managing inheritance, and only 26% feeling well-prepared for any major financial changes, there’s a pivotal opportunity for advisors to bridge the knowledge gap.
“As this [wealth] shift accelerates, capitalizing on it requires more than business as usual,” said Kerry Ryan, CPWA, senior director, Financial Services Industry Strategy & Marketing, Seismic. “Advisors must recognize gaps in financial literacy and preparedness, and meet younger investors with education, empathy, and a fresh approach. With stronger financial confidence, both those passing down wealth and those inheriting it can work toward long-term security and stability.”
Older generations are also not confident that Gen Z are able to manage the wealth transfer (more than four in ten Boomers and GenXers said this).
The research suggests that advisors should be ready for the needs of younger clients including the use of relevant and personalized content that resonates with Gen Zs, shared in the channels that younger generations use; and upskilling client-facing teams with technology including AI-powered tools.
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