Look Out Financial Advisors — Here comes Generation Z
I was speaking to a financial advisor recently and mentioned that my next blog post would be about Generation Z. Her response was “Why bother to write it now”. Then she said, “I’m not going to think about them (Generation Z) until I have too”. Let’s look at some reasons brands, and yes that includes financial services organizations, should start considering Generation Z (Gen Z) NOW.
According to CMO.com
· By 2020 Generation Z will account for 40% of all consumers. In fact by 2020 Gen Z will have $3.2 trillion in purchasing power
· Generation Z shares the same entrepreneurial spirit of the Millennials and about 72% of current high-schoolers want to own their own businesses, and 76% hope they can turn their hobbies into full-time jobs
· More than a quarter of America’s population currently belongs to Gen Z, and with each birth (361,00 babies born in the U.S. every day)the segment is growing
So who are Generation Z? As SJInsights points out Generation Z is one name used for the cohort of people born after the Millennial Generation. There is no agreement on the name or exact range of birth dates. Some sources start it at the mid or late 1990s but the more widely accepted period starts from the mid 2000s to the present day.
Gen Z was brought up in the aftermath of 9/11 and have never known a world free of global terror or war. To further rock their world many Gen Zers experienced firsthand the Great Recession. In fact according to a Bloomberg View article 73% say they were personally affected by the Great Recession. Those events plus the surrounding controversy of NSA surveillance and the prevalence of Cyberbullying has shaped their worldview.
According to Tim Elmore (Dr. Tim Elmore is a leading authority on how to understand the next generation and prepare tomorrow’s leaders today) Gen Z has 6 defining characteristics:
1. They are Cynical: Tim Elmore, who met with Gen Z students, felt they were fairly happy and well-adjusted. They are not giddy like so many Generation Y (Millennials) kids were in the 90s. They tend to be more realistic — not idealistic, seemingly jaded from the tough economy, terrorism and complexities of life.
2. They are Private: Perhaps it’s because they watched their older siblings get in trouble from posting controversial content on social media, but younger teens don’t want to be tracked. Additionally, as stated above, their need for privacy stems from the NSA surveillance controversy and Cyberbullying. Apps like Snapchat and Whisper have seen explosive growth in the last few years. In contrast, Facebook, which according to Mashable has lost 25 percent of this demographic since 2011.
3. They are Entrepreneurial: Like Millennials, these students plan to be pioneers, not merely settlers in a career. 72% of current high school students want to start a business. They feel like hackers, not slackers. Since they’re more jaded, they know life is hard and requires work. Witnessing the Great Recession has made them pragmatic and a generation of savers.
4. They Multi-task: By almost every measurement so far these Gen Z kids will take multi-tasking to a new level. They prefer to be on 5 screens at once (Smartphone, TV, laptop, desktop, and iPod/iPad), not 2 screens like Millennials. Get ready to communicate to them while they look around, not into your eyes because they are using multiple devices.
5. They are Hyper-aware: Generation Z has communicated enough with marketing researchers and academics to reveal that they experience 4D Thinking. Because their minds are streaming in so many directions, they’ve become post-moderns who are hyperaware of their surroundings.
6. They are Technology-reliant: This one won’t surprise you. If we thought Millennials were addicted to technology, get ready for more. In surveys, these teens put technology in the same category as air and water. They cannot imagine living without being connected all the time. These are true “digital natives”.
Neil Howe (American historian, economist, and demographer, best known for his work with William Strauss on social generations and generational cycles in American history.) has dubbed Gen Z The Homeland Generation. In a Forbes article Mr. Howe explains, “This name was actually chosen by readers of our books. We conducted an online contest in 2006 to name the generation coming after the Millennials. Several different names were suggested and voted on. Homeland Generation became the ultimate winner, apparently because the decade of the 2000s was marked by 9/11, the War on Terror, the creation of the Department of Homeland Security, and a sense that the “homeland” was no longer safe. Readers also sensed a worldwide cultural movement towards nationalism, localism, and an increased identification with one’s roots. The word also fits since this generation of children is literally kept more at “home” than any earlier generation of kids, thanks to the protective, hands-on child-raising style of Gen-X parents”.
Even at Gen Z’s young age we can draw a number of similarities between them (Gen Z) and their great grandparents (The Silent Generation). Each generation lived through global unrest, economic turmoil, and government over-reach. Specifically the Silent Generation as youngsters experienced World War II, the Great Depression and as adults lived through The Cold War, The Korean War and the McCarthy Hearings.
Those events shaped the Silent Generation into one of the healthiest and wealthiest cohort groups in America today. As mentioned above Gen Z is becoming a generation of savers and many want to own their own home one day. In fact according to Time.com “More than half of teens would give up social media for a year and do double the homework if it guaranteed they’d be able to buy a house when they’re older”. The article goes on to say “Generation Z — seems to prize home ownership like no generation since their great-grandparents (The Silent Generation). Additionally regardless of the rise of shared mobility, Gen Z also wants to own cars too.
Its obvious Gen Z craves financial stability. An article in GO Banking Rates confirms “Gen Z overwhelmingly favors formal training in financial planning and saving for the future. 85 percent of Gen Z respondents in a Northeastern University survey said colleges need to offer students ways to develop practical skills, like financial planning, and 60 percent are concerned about having enough money”. The bottom line is that in the next few years Gen Z will be ready to take on a savings strategy.
Now let me answer the WHY financial advisors and financial organizations should focus on Gen Z. First a Bloomberg View article point out that 64 percent of Gen Zers agreed with the suggestion that big corporations and banks control too much in America. It should be no surprise they feel that way because they experienced the Great Recession firsthand from their Gen X parents who were the hardest hit by the recession.
Next as I stated above Gen Z wants to develop practical skills, like financial planning. It’s worth reiterating that according to GOBankingRates’ 2015 Life + Money Survey of Americans’ biggest financial fears found that Americans are most afraid of living paycheck to paycheck. As such, Gen Z overwhelmingly favors formal training in financial planning and saving for the future.
Plus Gen Z speaks a different language — they speak Emoji. Emojis are small digital images, icons and symbols used to express an idea or emotion in text messages and other online communications and used widely by Gen Z. As stated by The Center for Generational Kinetics “Brands are harnessing the power of emoji to stay relevant and competitive with the next generation, known as Gen Z”.
It’s obvious financial organizations and financial advisors need to develop trust with Gen Z and develop a long term marketing strategy to reach this generation.
As a start I would suggest financial organizations partner with local high schools, colleges and universities to provide the financial education that this generation craves. In this way you will build trust among Gen Z and earn their business when they are ready.
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