As generational shifts continue and young individuals become more technologically adept, their behaviour and interests are evolving rapidly. According to a recent CNBC report, “Finance is the No. 1 industry Gen Z wants to work in” (https://www.cnbc.com/2023/06/28/finance-is-the-no-1-industry-gen-z-wants-to-work-in-says-new-research.html). This growing interest in finance is not only attracting more knowledgeable individuals into the industry but is also driving a notable trend: an increasing number of young people are beginning to invest.
Several factors contribute to this phenomenon:
- Technology and Accessibility: Digital platforms and apps have made investing more accessible, appealing to younger, tech-savvy generations. These platforms offer low-cost entry points, educational resources, and ease of use, encouraging young investors to participate in the market.
- Changing Financial Goals: Younger investors often prioritise different financial goals than older generations. They may focus more on sustainability, social impact investing, and achieving financial independence at an earlier age. Wealth management firms are adapting their offerings to meet these evolving preferences.
- Cultural Shifts: There is a growing cultural shift towards entrepreneurship and financial independence among young adults. Many view investing as a key avenue for building wealth and achieving long-term financial goals.
- Increased Financial Literacy: Millennials and Gen Z are more financially aware and proactive about their finances compared to previous generations. Social media, online forums, and educational content have contributed to this increased financial literacy, leading more young people to seek professional wealth management advice.
- Early Career Success and Side Hustles: Many young professionals are achieving financial success earlier in their careers, often supplemented by side hustles or entrepreneurial ventures. This additional income has allowed them to start investing and seeking wealth management services sooner than previous generations.
- Generational Wealth Transfer: A massive transfer of wealth is occurring as baby boomers pass their assets to younger generations. This transfer is prompting younger investors to seek wealth management services to handle inherited assets.
In summary, wealth management firms are recognising this trend and are increasingly tailoring their services to attract and retain younger clients. Young investors are likely to change the landscape of wealth management by introducing fresh perspectives, digital proficiency, and a willingness to explore innovative investment opportunities. While structured products may not currently be the preferred investment option for younger investors due to their complexity, they could become more popular in the coming years. It will be interesting to see how this market evolves.
