Tips for winning over gen-Z clients

Gen Z may have unprecedented access to personal finance resources and trading platforms, but many crave customized financial advice and education, which presents an opportunity for advisors.

Gen Z is the cohort born between 1997 and 2012, with the eldest among them now in their mid-20s. According to May 2023 research by the CFA Institute and the Financial Industry Regulatory Authority, gen-Z Canadians have shown more interest than their global peers in jumping into the investing world, with a higher proportion of 18- to 25-year-olds in Canada owning at least one investment.

The survey of 2,872 people in Canada, the U.S., U.K., and China also found that gen-Z Canadians started investing earlier than did previous generations. Moreover, they were more likely than other generations to have planning-oriented financial goals such as building their emergency funds, saving for retirement and going on vacation, the research report said.

A separate survey of 2,500 Canadian adults by BMO and Ipsos from September 2023 found that more than two-thirds of gen-Z respondents believed they’ll need the support of a financial advisor to achieve their financial goals.

“The younger generation is extremely passionate and very involved with their finances or trying to get there,” said Brandon Beavis, co-founder and chief marketing officer of Blossom Social in Richmond, B.C. Blossom is a portfolio-tracking app with a social media component that allows users to post and chat about investing topics. The majority of the app’s users are between 25 and 40 years old. “They’re trying to surround themselves with education and people who know what they’re doing,” Beavis said.

Advisors may not yet be courting the youngest investing generation, as gen-Z Canadians are still early in their careers and generally don’t have a lot of money. But that may be a mistake, “especially with the great wealth transfer,” Beavis said. “It’s a very important demographic to keep an eye on.”

Meghan MacPherson is an associate financial planner and investment representative with Impact Financial Group Inc. in St. Catharines, Ont., whose target client base is between ages 25 and 40. MacPherson said the perception of younger clients not being as valuable to advisors has filtered down, making many younger people hesitant to reach out for advice.

“I hear that from 90% of people I’ve started working with,” she said, noting that many also fear being told by a financial advisor that they’ve made financial missteps or weren’t on track to meet their goals.

MacPherson said she prioritizes working with gen-Z and millennial clients because getting involved with clients early in their lives gives her an opportunity to make a significant difference in their long-term financial well-being.

Gen Z is the first generation to grow up entirely with the internet, and the oldest ones entered adulthood as robo-advisors gained steam. That’s made them both savvy consumers of personal finance content on TikTok and Instagram, and wary of being sold financial products, said Nate Kennedy, the 27-year-old Hamilton, Ont.–based personal finance influencer and podcast host of New Money with Nathan Kennedy. Kennedy, whose audience is primarily aged 18–34, has more than one million followers across TikTok and Instagram.

Advisors looking to recruit this generation will have to be transparent about how they’re compensated and the fees associated with investment products, Kennedy said. They will also need to provide value beyond the product shelf.

“If you’re going to buy ETFs and take 1% of my money, then what are you doing for me?” Kennedy said. “If you’re planning my life with me and [helping me] think strategically, I think that has value.”

Beavis said gen-Z clients are generally more interested in fee-for-service relationships, given their fluency with low-cost robo-advisors and DIY platforms.

MacPherson, a commission-based advisor, said the compensation model hasn’t been an issue for her clients. This is partly because the fees are transparently disclosed, and also because of the value of the planning, she said.

“The younger generation is looking for that full relationship and experience that’s going to give them those holistic results and move them forward,” MacPherson said. “The advice piece is the key component of what that generation wants.”

She noted that, unlike older clients who typically stayed with employers for longer, had workplace pension plans and achieved financial milestones linearly, younger Canadians face an entirely different job market, difficulty breaking into the housing market and a higher cost of living that forces them to juggle competing financial priorities.

“[The planning is] a bit more complex but less traditional than it was in the past,” MacPherson said.

Overall, younger Canadians are more interested in experiences and enjoying their lives in the present, something that advisors will need to keep in mind when conducting financial planning exercises, Kennedy said.

“[They want] a plan that incorporates that,” he said, “and isn’t totally future-focused, that’s not just about scrimping.”