More than 50 percent of the world’s population is under the age of 30. But raging global inflation means most of Gen Z, born in the late 1990s to late 2010s, can barely afford to pay rent and food bills. However, Gen Z is starting to harness its increasing buying muscle (see Fig 1) and the way they view their financial choices is different to previous generations. So, who are Gen Z listening to and trusting?

Dr Michael Harrison is a senior lecturer in economics and finance at the Royal Docks School of Business and Law at the University of East London. His expertise spans microeconomics and econometrics. He warns that Gen Z have never known a ‘normal’ financial sector in their entire adult life – so far. “They have seen consistently low real interest rates and consider that to be normal.” However, thanks to a new era of brutal inflation, among other pressures such as the cost of living, the real rate of return on any asset or investment has been negative.

How rational is it for any 20-something to walk into a bank and ask about savings products, let alone more opaque, investment-grade products like pensions? It’s not, says Harrison; Gen Z have had little incentive to explore. In other words, the shop front is in need of a refit, at least as far as bricks and mortar operations go. The asset management industry has often looked out of reach: over-complex, cryptic and reliant on knowledge well outside any educational curriculum. “I think it’s a shop front that many Gen Z will never go into. Even a savings product, much simpler than a pension, is not attractive.”

Quite serious and very different
But Gen Z are digital natives, at ease in a ‘post truth’ world where social media and relevant content is king and the conversation super-public. They have access to information – tons of it – about savings products and the financial industry if they want to look. Do they? Advertising executive Ian Baer has worked with many brands and works closely with companies who want deeper relationships with Gen Z. The collapse of financial institutions since the 2008 financial crash left the field open to new entrants, he says; monolithic institutions are much less trusted now.

The vehicle for engagement of this group is smarter financial education

“Gen Z are sort of running a parallel path,” says Baer. “They are very much living in the moment. They don’t know when life is going to get disrupted. For those who are older, the pandemic is a singular moment or period. Things were never quite the same before or after. But for Gen Z they’ve had three years of it taking up their adolescence and early adulthood. They don’t know it as uncommon. So they have this desire to experience as much of life as they can, as quickly as they can.”

“And they worry about the future. They are a generation struggling with how they’re portrayed in the media as selfie and social media obsessed. The reality is they are a very serious generation and quite principled,” Baer adds. How do you find the right voice, or channel to reach them? It’s especially sensitive, as Gen Z does not like to be told what to do, or what they need.

Tell a real story
While social media is often the default response, it’s not cut and dried, as we shall see. While ‘socials’ is still a relatively new medium for some financial players, for Gen Z themselves it’s not even social media. It’s just the way they connect with the world, Baer goes on. “It just happens to be through those channels.”

Connection with authentic content is valued. More storytelling – a lot more. More outreach, aspiration and education. “That’s what will draw them in,” Baer continues, but he warns Gen Z don’t think in terms of typical brand or consumer investor terms. “They need to be engaged with content that has meaning and value, whether they can experience or learn things vicariously through it.”

Think of a 26-year-old entrepreneur who’s starting to ‘make it’ and learning about some of the financial wisdom they’ve gained. “That’s going to be meaningful – the kind of experience a Gen Zedder wants to step into.” Recently Sooth, a marketing agency, tracked affinity scores – loyalty connection to brands – from 17,000 influencers. Gen Z rarely followed investment advisers or financial professionals online, they found, despite their cohort placing a high priority on saving. “These findings align with our broader insight that this generation doesn’t want to be instructed.”

The female lead
“While both men and women care about savings,” Sooth went on, “women are 15 times more likely than men to prioritise saving money and will be much more likely to engage with content about savings advice.”

In contrast, men tend to see savings more in terms as a path to wealth accumulation. This is a major gender attitude divide. Online TikTok videos in this space typically address how to ditch debt or how to save money while travelling, or offer short chats about the power and risks of emotional spending.

Gen Z women tend to look to role models as self-made success stories, Sooth thinks: Kylie and Kendall Jenner hold more influence than any finance ‘expert.’ Think role models too such as US singers and actresses Zendaya and Selena Gomez. Gen Z women are doubly likely to look at content if there’s a music, fashion, or entertainment tilt.

But it needs to be honest or ‘real.’ Last year Zeed, a fintech video investment platform, secured more than £200,000 in early stage funding. Co-founder Rohan Regmi, a UCL economics graduate, had previously worked in private equity. Regmi felt Gen Z was underserved by financial services firms globally.

What Gen Z has picked up the most is when someone is being genuine or not

“We create real-time animations with financial data to help investors build convictions which are data-driven,” explains Regmi. “If someone is looking at a financial product, we help them to make comparisons with other products in terms of fees or what’s held in it.” Zeed also adds CEOs, fund managers and other content contributions into the mix, plus broker connectivity, allowing users to get content insights from holdings they already own. This is quite a potent mix, pairing in-house finance content with trade execution, helped along by AI and video.

“We’re able to deliver them content on their actual portfolio. So perhaps you’re up five percent but you don’t know why.” So it’s big on personalisation. Social media, then, plays a huge ‘content’ part. Yet James Berkeley, a strategy consultant who works with several major financial players, warns that social media isn’t the be-all and end-all – by any stretch.

He recently worked with Glasgow-based fintech company Nude, a goal-setting app helping Gen Z save for a deposit for their first home. “The challenge was: how do we attract, how do we engage this particular Gen Z cohort? But the difference between generations isn’t as big as those differences within generations.”

In other words, there are major differences in education, the health of the ‘bank of mum and dad’ (if there is one) and life chances. What Berkeley needed to do was strip back all preconceptions and treat everyone as individuals. “Then you can engage with them in different ways. So the first learning point is not to default to social media platforms. It’s actually a mix of different mediums, including the workplace.”

Pay slip advantage
Recently Berkeley worked with logistics company GXO, which has a younger staff profile in some business areas. One priority was to raise awareness with shop floor staff at a time of their lives when cash was important and saving for the future less so. The insights were obvious and not-so-obvious – the latter more interesting.

“Even posters and fliers that had been mailed through the workplace with pay slips had impact and traction, making decisions in which they would apportion some of their monthly salary,” he says. This is an approach as far away from TikTok influencing as you could think.

“The key point here is not an over-reliance on perceived modes of digital communication. We are all individuals. Communication must be unique, not generic. A multi-channel approach was by far the most effective.”
But much of the Gen Z investment ‘noise’ will inevitably divert to ‘social.’ Sigita Kotlere from fintech investment platform company Nectaro says the asset management industry needs to reiterate critical thinking and the promotion of “a wise lifestyle, moderation and mindful consumption.”

As for the workplace, Gen Z are less interested in working in the tech sector than millennials. Gen Z finds tech too turbulent, says the Graduate Management Admission Council (GMAC), “and is less likely to want to pursue a career within the industry. This is seemingly due to the mass firings that have been seen across tech companies such as Alphabet, Meta and Amazon, exacerbated by the volatile nature of tech company stocks and shares.”

Steady tiller wanted
Another ‘want’ is stability, closely associated with financial independence, a consequence of the Covid pandemic, GMAC adds. Meanwhile, challenger app-based banks are doing their best to disrupt the Gen Z saving space, says Dr Harrison, tending to offer ‘one-stop-shops’ via partnerships with other providers, though Harrison is cautious about ‘robo’ financial advice in principle.

“I’m always a bit cautious when fintech is involved in financial planning. Robo advisers are not, by and large, able to delve into the world of tax,” he says. Pensions can be the right savings vehicle he adds, because for example, UK savers get a 25 percent tax write-down on anything they put into one which you don’t get on a mutual fund – but they’re not right for all. But the app-based business is evolving, as players like Zeed show. Human beings are expensive and app-based tech developed at scale is cheap.

A safer landing
In the UK, Royal Assent for lowering the pension auto-enrolment age from 22 to 18 was passed in September 2023, paving the way for introducing, potentially, better financial resilience for younger workers, especially those in the gig economy, many doing multiple low-paying jobs.

The pensions industry will need to think hard about how they target them. For many, pensions are boring and complex, though quick, short videos on topics – the power of compound interest being one example – can elicit quick-fire questions: How do I find a compound interest investment? Where would I go to do this? So the interest is there.

Young Pham is an investment analyst who works with BizReport, a finance-based media company helping individuals make financial decisions. Pham says investment companies have to lean deeper still into financial education. “Gen Z trusts and resonates with brands that provide value and education. Asset management firms should invest in educational content, such as webinars with Q&A sessions and social media posts.” Also look at micro-investing apps allowing users to invest spare change “from everyday transactions,” he says, where “Gen Z discusses personal finance. Asset managers can participate in these chats as credible sources of information and guidance.”

The three pillars of wisdom
The education emphasis resonates strongly with Berkeley. A lack of sound financial education from family or school continues to disadvantage many, frustratingly. “The vehicle for engagement of this group is smarter financial education. I can’t tell you how important it is. The quality of decisions that people make can have a transformative impact and schools are doing a wholly inadequate job,” he said.

Berkeley double downs on the three pillars of capital – cash, credit and investment. All three support everyone through a life: how do we think about them? How are these reliably replenished? How do wealth managers make their importance better understood? While TikTok influencers touch on all three often, myths of financial wisdom can also be created, often handed down via family members. Not all are helpful or relevant. But the point is that everyone’s experience is different – and life is expensive.

When the financial goal moves into the future the incentive is less powerful

Given super-high asset prices and cost of living expense, what savings optimism is there for Gen Z? Dr Michael Harrison thinks a future era of positive interest rates, not so battered by inflation, might nurture a wider, more natural mindset. But that’s a work in progress in many countries. Gen Z also carries rather more debt compared to millennials and Gen X. Right through their working career they will need to service it. Debt management guidance on student loan debt or other loans, including income-driven repayment plans along with a balanced financial plan are important, adds Sigita Kotlere.

A rebalancing of values
Jessica McDonald is a US-based financial adviser and a millennial, generally someone born between 1981 and 1996. She runs her own advisory business, Southern Wealth Builders. McDonald has a bird’s eye view of the pressures through her clients. “I think Gen Z is wildly misunderstood and dismissed for their age,” she says. “This generation is more creative overall and takes much better care of themselves regarding setting boundaries and not letting people take advantage of them.”

Gen Z trusts and resonates with brands that provide value and education

“Stereotypically, millennials, like me,” she goes on, “have not been able to say ‘no’ to appear more valuable, thus resulting in burnout and being overworked.” Gen Z has rapidly understood this and, she claims, stands firm on workplace values to maintain a life separate from work. What works she says, is to be 100 percent transparent. “With social media everywhere, what Gen Z has picked up the most is when someone is being genuine or not. That’s one reason why financial salespeople would not be as successful with Gen Z – Gen Z can’t tolerate being sold something.”

She pushes her clients to focus on the ‘why’ and emphasises financial literacy to fix bad habits and back up good ones. “Self care related to finances is a balance of your present self and your future self. We want to plan to make a better life for ourselves in the future, but not at the expense of making ourselves miserable.”

Meanwhile an intergenerational handover of capital is underway between boomers, millennials and Gen Z. While some of this conversation touches on old age, most current financial planning still swerves the huge cost of old age care long-term. But the asset management industry is trying to re-invent itself to remain relevant and to manage their money with meaning.

There are clearly deep generational divides in how money is made, spent and invested. Can it persuade Gen Z – and fast enough – to buy their story?