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The New Investor: How to Guide Investors with a New Digital Mindset

Just as the financial world is changing, so are the people who use it. Internet portability allows for new services that emphasize ease and autonomy—everything from online stock trading to digital asset exchange apps—giving investors exposure to more opportunities and faster access than they’d ever previously known. For RIAs, this means looking at the new investor through a different lens.

Grabbing your slice of the Great Wealth Transfer

When we think about generational shifts, we usually think first of clothing or music—things we liked that our parents promptly hated or hearing our children use words that remain foreign to us. Although it’s not the first example we go to, this evolutionary trend is just as prevalent in investing as it is in cultural differences—and Millennials and Gen Z are perfect examples. This is incredibly important for advisors to note because these generations are about to inherit a lot of wealth. Around $78 trillion, to be exact.

Source: The New York Times

You keep hearing about it, and we keep harping on it, because it’s urgent. The Millennial and Gen Z generations are predicted to inherit roughly $78.3 trillion in assets from their predecessors over the coming decades, and the start of this flow has already begun. According to a study, since the beginning of 2020, U.S. Millennials have gained more than $5 trillion, putting their cumulative wealth around $14 trillion.

Here’s where you come in. A recent study by Intuit revealed some jarring statistics about the younger generation—Gen Z in particular:

  • 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 

Although potentially shocking at first glance, these figures aren’t altogether surprising when we dig a little deeper. After all, look at reporting for the millennial generation. The New York Times referred to millennials as being “squeezed between the worst inflation rates of their lifetimes, eye-watering housing prices, and the precarious fallout of the pandemic,” all while being  “kneecapped by the Great Recession,” causing most to earn 20 percent less than Baby Boomers did at the same stage of life. 

These generations weren’t exactly set up for self-made financial success under the prevailing circumstances, but they were given more tools than were known to previous generations to take control of their investing. Pair increased control through mobile apps with scrutiny, and potentially mistrust, of the system that put them in their current economic positions, and you can see why most of them are flocking to a new, accessible market. These wealth-inheriting generations want and need guidance from a licensed professional. 

The new investor isn’t an age; it’s a mindset

While the new subsect of investors inheriting wealth is a major consideration in the future of asset management, the new investor is defined more by a mindset than an age. They can’t be pigeonholed to one specific demographic, which makes sense because one of the core attributes of blockchain technology is that it is available to everyone. The digital asset market harbors and fosters immense potential for both cutting-edge investments like cryptocurrencies and existing investment vehicles like private equity, making it an appealing space to investors from all walks and stages of life.

The new investor wants to engage in future-forward strategies with support from professionals. The thing is, with all of this new accessibility and autonomy, they’re going to want to do it their way.

Finding the balance between control and guidance

There are a few factors to the new hybrid approach to fund management that are emerging with the influx of the new investor. Here are some main points to help you navigate: 

  1. Support their needs

Digital assets aren’t going anywhere, and, in part, due to the financial hand they’ve been dealt, there are aspects of the digital market that are more appealing to younger investors. Prior to now, traditional investments seemed somewhat out of reach to a generation burdened with college debt and inflation, and access felt complicated. Cryptocurrencies gave them a chance to engage in a market with less upfront capital and intermediaries. 

The same Intuit study mentioned above found that 50% of Gen Z’s surveyed were invested in cryptocurrencies despite not fully understanding blockchain or how it works. Rather than dissuading them from cryptocurrencies, you have the opportunity to educate them and show the benefits that come with guidance from a professional with years of experience, as well as support them with perspective through the ups and downs that come with new industries and help them decide when to buy and hold assets (for more on conservative investing in up-and-coming markets, read this article from our CEO).

  1. Meet them where they’re at

Technology moves fast, and the ability to buy, sell, and trade assets autonomously is much easier than it ever used to be. As one might say, there’s an app for that, and the younger generations are used to having a significant amount of control over their holdings. This is where held-away access to investment apps can be extremely beneficial, so you can still maintain visibility into investments and advise when needed while letting them make their own way when they want to.

  1. Help them access the digital market as a whole.

As Bank of New York aptly put it, “Crypto is an example of digital assets, but to say that digital assets are a lot more than crypto is an understatement.” Tokenized assets like private equity can bring the proven track record of traditional high-net-worth investment vehicles to the ease, adaptability, and efficiency of blockchain. In other words, there are several known tactics in the traditional investment space that are applicable to the emerging digital one. 

Blockchain lets the younger generation leverage their grandparent’s successful tools, just better and faster. For those inheriting wealth with little experience in the space, tokenization combines trusted traditional options with efficient, expedient blockchain technology. As an advisor, you are uniquely positioned to help them access these investments and provide a secure, digital option that leaves meme coins in the dust.

Be ready for the new investor

With the Generational Wealth Transfer already underway and the new investor showing a demand for digital assets, it’s important to put the rails in place now to support this emerging market. Our whole goal with starting Onramp was to make access to digital assets as easy as possible for advisors, and that’s what we did. Our platform is fast, efficient, easy to use, and integrates seamlessly into your existing tech stack, so there’s no need to reinvent the wheel. We let you manage assets directly, give you access to comprehensive reporting and innovative model strategies, and even let you view held-away accounts on crypto apps. We also partner with firms that offer tokenized assets, like Securitize, to give you diverse access to this growing space.

Be ready to advise the people that need it most. You can get started here.

Disclaimer:  This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed do not express the views or opinions of Blockforce Capital or Onramp Invest.