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Talking money with Gen Z: The Great Wealth Transfer

In late 2022, we started to see a lot of mentions surrounding the Great Wealth Transfer. Baby boomers are projected to pass down a whopping $68 trillion in assets to younger generations. When you consider the many innovations that hit the market over the last century—Microsoft, Apple, Amazon, etc.—this isn’t altogether surprising.

As for the receivers, this positions the people inheriting this windfall—Gen Z and Millennials—to benefit. However, a recent study done by Intiut not only reveals that Gen Z doesn’t feel capable of managing their finances or investments but also shows that nearly 50% of the Gen Z population expected to inherit $68 trillion in wealth over the coming decades invests in crypto despite not fully understanding blockchain. 

Advisors, here’s what you need to know:

Why Gen Z is uncomfortable with money

While everyone’s comfort level with finances varies, regardless of generational category, there are several cases that could be made for Gen Z’s discomfort. 

Education is expensive

Unlike baby boomers, Gen Z have debt from college loans that are potentially triple the cost of what older generations had to pay for education. Accord to Forbes, in 1980 “the price to attend a four-year college full-time was $10,231 annually—including tuition, fees, room and board, and adjusted for inflation—according to the National Center for Education Statistics. By 2019-20, the total price increased to $28,775. That’s a 180% increase.”

“Walking around like they rent the place—”

A Bankrate survey published in March of 2022 showed that Gen Z, similarly to Millenials, reports that they cannot afford to buy homes, but 59% of them still consider homeownership to be the hallmark of success. In many ways, homeownership still equates with the American dream of stability, something this demographic does not feel it’s capable of achieving.

Less purchasing power

The dollar no longer gets you what it did back then, and Gen Z is feeling the squeeze. According to an article from Fast Company, “Gen Z has 86% less purchasing power compared to baby boomers when they were in their 20s. Americans have seen wages increase by 80% since the 1970s. However, the average Consumer Price Index has increased by over 500%.” Add this to the trickle-down effect of the 2008 recession that plagued their parents and the ground upon which Gen Z financially stands appears much shakier.

New generation, new pressures

Another large reason for the overall feeling of financial failing is something that didn’t exist in the 1980s: social media. It’s easier than ever for people to flaunt their extravagant lifestyles and life achievements online. With a constant barrage of pressure from peers, Intuit reported that 1 in 3 Gen Z are comparing themselves to people they see on social media, and 7 in 10 of them say that this content makes them feel they are behind. Whereas 50% of the general population reports feeling this way, 70% of Gen Z bears the feeling of inadequacy. 

Unfortunately, this creates a silo and inhibits communication with peers. Despite this shared experience, only 23% of Gen Z are comfortable discussing debt. In fact, 58% of them say that if asked about their debt, they would lie about it. Taking all of this into consideration, it’s understandable that Gen Z doesn’t feel financial comfort.

What Gen Z cares about

When it comes to the wants of Gen Z, their goals have shifted from the ones their parents grew up with. Whereas older generations focused more on saving for a home and retirement, Gen Z are less likely to prioritize these goals. Part of this may be because 66% of Gen Z report feeling as though they’ll never have enough money to retire. 

Another reason is that survey shows they give greater priority to self-betterment and self-fulfillment through personal growth and mental health rather than through financial growth. In fact, 3 in 4 Gen Z say they would rather have a better quality of life than extra money in the bank. You know, less girl-bossing, more girl-resting. 

Key points

Aside from the statics listed above, there are a few main points that are key for RIAs and financial professionals to take away from the Intuit study: 

  • 1 in 3 Gen Z do not feel confident managing their money
  • 70% of Gen Z know it’s important to invest but don’t know how.
  • 63% of Gen Z say they have financial knowledge but no idea how to use it 

And, perhaps the most important takeaway: 

  • 48% of Gen Z reported buying crypto even though they don’t fully understand blockchain

The takeaway

If you look at that from a birds-eye view, that means nearly 50% of the Gen Z population inheriting $68 trillion in wealth over the coming decades invests in crypto. What this means for advisors hoping to stay relevant through this transfer of funds is that digital asset knowledge is a crucial part of serving the next generation of investors. 

More importantly, these investors need you. While many may feel that their evolving goals are out of step with that of their predecessors, you as an advisor are in the unique position to support these changing needs while seizing a piece of that $68 trillion in AUM. All of the reasons are there, and we have the tools to support you. From education to an integrated tech stack, you’ve got what it takes, and we’ve got you covered.

Ready to meet the future head-on? Start here.