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Business Strategy
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How to adapt advice to the differing needs of Gen Y and Gen Z

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Advisely-Team
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6 months ago

Embracing technology and personalising your service are two mainstays of any financial adviser’s work and even more so for clients under 40

While we all make assumptions about others based on their age, the only constant among investors under 40 is that they need to eat, drink and sleep to survive. Beyond that, their wealth, financial literacy and openness to accepting advice can vary widely.

However, recent studies of Gen Y or Millennials (mid 20s to 40) and Gen Z (under 26) provide some useful information about the trends in these age groups.

Busting the myth that financial advice is only for wealthier older people, a Colonial First State survey of more than 2000 consumers in July 2023 has found that Millennials and Gen Z consumers are more open to advice and more willing to pay for it than those in older age groups.

While cost remains the most significant barrier for those under 40, there is also an awareness and knowledge gap, says Josh Grace, Colonial First State Group Executive.

“Many younger Australians want advice but don’t know where to start. The research found that 18% of under 40s don’t know the right questions to ask and 15% admit they don’t know how to access a financial adviser,” he said.

Grace says different advice models – such as digital advice – could help bridge the gap until they can afford more comprehensive, face-to-face advice.

Two-thirds of under 40s (63%) are open to a digital advice solution, according to the survey.

Increasing engagement

Queensland-based firm, Financial Advice Matters created a new model eight years ago that has increased engagement with Gen Zs as well as potential clients from other age groups.

The firm established a separate brand, Financial Wellness Matters, to provide financial education in workplaces.

Managing Director, Darren Smith says the structured workplace program provides practical tools and skills to help participants make better financial decisions.

He says the under 30s in particular are “absolute sponges” for financial knowledge.

“They’re very keen, they ask really good questions, and they want to know all the tips and tricks that’ll help them stretch their dollar further,” he says.

Almost nine in ten Millennials and Gen Zs have delayed at least one life milestone because of insufficient finances, according to a survey of more than 1000 people in Australia and the United States in 2022 by Victoria University. Nearly half of the Millennials surveyed said a lack of control over their finances prevented them from buying a home.

That’s supported by a worldwide Deloitte study of more than 22,000 Gen Zs and Millennials in 44 countries, which has found their biggest concern to be the rising cost of living. Half of both groups say they live from pay-to-pay but, encouragingly, they are confident their financial situation will improve in the next year.

Smith says that, while research provides a guide about views and behaviours, it’s important not to make assumptions about where your potential Gen Z and Millennial clients sit when it comes to their finances.

“Let's face it, there are a lot of wealthy Millennials out there, and maybe some Gen Zs who have done very well along the way. There’s also the issue of intergenerational wealth, which these two generations will benefit from significantly over the next 20 to 30 years.

“So, don’t prejudge. Start with a blank sheet of paper and build it up from the person in front of you,” he says.

“Everyone’s a bit different. I always encourage the team to learn what the client prefers so that we can connect with them and they feel respected.”

Taking into account the differences can help to build a stronger, more fruitful relationship for both advisers and clients.

Updated 5 months ago
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