How advisers can engage Gen Z

Gen Z remains one of Australia’s largest unadvised demographics. Now entering their mid to late 20s, many are confronting major financial decisions – from buying property to managing inheritances – largely without professional guidance.

One industry professional looking to elevate Gen Z’s involvement is Neil Rogan, head of distribution for Australia and New Zealand at Russell Investments. For Rogan, a good starting point is understanding who in Gen Z is actually seeking or considering advice.

Speaking to ifa, Rogan said: “Females are more likely to go seek advice, that was around 68 per cent [of the Gen Z demographic seeking advice].

“They’re also more likely to be metro based. They’re probably more likely to be on a higher income than potentially the median.”

Although the majority of Gen Z are not seeking advice and represent a large portion of the advice gap, Rogan explained this gap may be easier to close than advisers might initially assume.

While the price of advice remains a stumbling block for many in Gen Z, they are not as price sensitive as some of their older counterparts.

“Research [we conducted shows] that Gen Z are the least price sensitive of the generations,” Rogan said. “The question that we asked was, ‘How much money would you be willing to spend on advice?’ Thirty-eight per cent of the non-advised Gen Zs said that they would pay up to $2,500 a year for advice.”

Rogan explained that younger investors are more willing to spend on advice because they see it as an investment in their future wealth, saying they are “more likely to make a $2,500 investment to be $200,000 better off or to have a home in 10 years,” while older clients tend to focus on wealth preservation and are more price sensitive.

Another key component for Rogan in reaching Gen Z is understanding where professional advice can make the most impact for this market. But beyond helping set long-term investment goals, Gen Z may also need guidance to address low financial literacy.

“There’s been a big focus on financial literacy in schools and various programs. Yet what we know from the research is that this generation is not as financially literate as, say, Gen X,” he said.

As highlighted by Rogan, while Gen Zs have access to various financial literacy tools, financial competency takes discipline, focus and time. While advisers are not primarily responsible for addressing financial literacy gaps, studies have repeatedly proven advice boost clients’ confidence and understanding of their finances, putting advisers in a strong position to help elevate both.

Perhaps the most crucial step in reaching the Gen Z market is clearly communicating the value of professional advice, Rogan added.

As such, he said that when considering how advice can help Gen Z meet investment goals, build future security, and boost financial literacy and confidence, advisers need to emphasise the relational aspect of their role.

“It is a long-term game. For the younger group who are wanting more advice and wanting to feel more confident, the specific areas they want to feel more confident in is [long-term] navigation [of financial markets].

“It’s really about doubling down on showing the long-term gain and providing some evidence and proof of points.”

Creating advice models that focus on family-oriented advice is another avenue of exploration, according to Rogan.

He suggested that including children in investment discussions can not only introduce younger Gen Z to the benefits of advice but also guide parents in aligning portfolios with their children’s values, potentially influencing how funds are invested while the parents are still alive.