Wealth Management for the Next Generation: Meeting the Needs of Millennials and Gen Z

Wealth Management for the Next Generation: Meeting the Needs of Millennials and Gen Z

Balancing income, consumption, and investments is one of the pillars – and one of the main challenges – of wealth management, the financial market branch also known as wealth management.

The pursuit of this balance is just as fundamental for millennials and Gen Z as it was for their parents and grandparents. However, in an environment with new technologies emerging all the time and profound transformations in the ways of living and working, how do you decide where to invest? And how do you take good care of this wealth over the years?

From now on, let’s delve into the financial characteristics and challenges of the younger generations. You will discover how to address the investment demands of this audience and adapt your business to an increasingly competitive and demanding market. Stay tuned!

Financial Characteristics and Expectations of Millennials and Gen Z

The Encyclopaedia Britannica states that millennials (or Generation Y) are people born between 1981 and 1996. They are the children of baby boomers (Generation X).

Throughout their childhood and adolescence, millennials experienced a period of technological revolution. The invention of personal computers, the popularization of the internet, and the emergence of the first online social networks are just a few of the watershed moments they witnessed. Generally, millennials:

– Have an experience-oriented mindset, prioritizing spending money on activities and travel rather than material goods.
– Value sustainability and social responsibility, choosing brands and companies that share these values.
– Are more likely to seek convenience and accessibility in their consumption choices, preferring online services and apps.
– Tend to prefer the sharing economy, such as renting properties, car-sharing, and streaming platforms.
– Are more inclined to adopt financial innovations, such as mobile payments and cryptocurrency investments.
– Value transparency and personalization in the provision of financial services, seeking solutions that adapt to their individual needs and provide control over their money.

As for Generation Z, composed of those born between 1996 and 2012, they grew up accustomed to the virtual environment. Not surprisingly, they are also called digital natives. People of this generation:

– Value authenticity and have a strong sense of social and environmental responsibility, seeking products and services that reflect their identity.
– Have an entrepreneurial mindset and seek to create their own businesses and independent projects.
– Are constantly connected and use social media as their primary tools for communication and consumption.
– Prefer experiences that offer instant gratification.
– Are more inclined to adopt mobile payments and other digital solutions instead of physical cash transactions. In Brazil, Generation Z is the one that most uses digital channels to explore investment options.
– Value diversity and inclusion, expecting companies to demonstrate this stance in their marketing and hiring strategies.
– Are more likely to take calculated risks in pursuit of significant financial returns.

Investment Strategies Aligned with the New Generations

Like previous generations, millennials and Generation Z demand investment solutions tailored to each stage of their lives.

However, with the social, scientific, and technological transformations seen in recent decades, the needs of younger individuals are also changing.

Let’s take the life expectancy of Brazilians as an example. According to the Brazilian Institute of Geography and Statistics (IBGE), it increased from 57 years in the 1970s to 77 years in 2021. This means that millennials and Generation Z are likely to live longer and, therefore, need to prepare to support their cost of living for a longer time after retirement.

Another point that has sparked discussions is the need for customized solutions based on gender identity. A 2021 report from the Swiss bank UBS pointed out that LGBTQIA+ individuals face specific obstacles in their wealth-building journey, such as having to leave their parents’ house without a consolidated source of income, for example.

We cannot forget the younger generations’ concern for sustainability and social responsibility. An important approach is to offer ESG investments – options that allow young people to invest in companies committed to ethical and sustainable practices.

It is also essential to go beyond traditional investments (stocks, real estate, fixed income). This may include investing in cryptocurrencies, startups, and shares of companies involved in innovative projects.

It’s important to keep in mind that the willingness of younger individuals to take calculated risks does not negate the need for a thorough analysis of their investor profile.

Additionally, millennials and Generation Z also seek financial security, which requires building an investment portfolio capable of protecting their wealth while offering consistent positive returns.

Women in the Spotlight: Opportunities and Personalized Approaches

The number of women investing in the stock market in Brazil jumped from 179,000 in 2018 to 1.4 million in early 2023. Today, just over 40% of them are under 35 years old.

Despite representing 23% of the total number of individual investors on the B3 (Brazilian stock exchange), women are beginning to look at assets beyond stocks. In terms of the performance of their portfolios, various studies conducted in Brazil and abroad point in the same direction: women seek more information before investing, manage risks better, and consequently, achieve better returns on their investments.

However, many of them still have lower income compared to men with similar professional experience. Additionally, many end up interrupting their careers when they have children or have to care for older relatives due to a lack of support networks.

That’s why, when it comes to wealth management, it’s essential to offer personalized approaches for women. Wealth management professionals can help female clients plan for life-changing moments, preventing a lack of resources from derailing their plans.

Practical Guidance for Wealth Management Professionals

It’s challenging to define when one generation ends and the next begins. The differences that often mark this transition involve behavior, worldviews, ambitions, concerns, values, and other subjective elements that make up the so-called zeitgeist (the spirit of the time).

Ideas about long-term investments and retirement are also influenced by the spirit of the time. Therefore, the first step in serving younger generations is to understand their personal goals and design strategies to achieve them. Other tactics may include:

1. Sustainable investments: Wealth management professionals can offer options aligned with the social and environmental values of these generations, such as ESG funds, socially responsible companies, and renewable energy projects.

2. Portfolio diversification: Encourage investments in both traditional assets (stocks, real estate, fixed income) and alternative assets (cryptocurrencies, receivables, startups), helping clients take calculated risks.

3. Financial education: Provide information and resources that help young people understand concepts such as budgeting, saving, and investing. This can include seminars, webinars, online content, and interactive apps.

4. Personalized approach: Identify the needs and goals of each client, considering their financial situation, goals, and preferences. In this regard, investment management tools can assist your business.

5. Proactive counseling: Understand the needs of millennials and Generation Z and offer, for example, periodic portfolio reviews, investment strategy adjustments, and guidance on how to tackle specific financial challenges, such as student debt, relocation, buying a first home, and so on.

6. Transparency and trust: Be transparent about fees, commissions, and risks associated with investments. Wealth management professionals should be honest and open in their interactions, demonstrating a genuine commitment to their clients’ financial interests.

7. Use of technology: Use digital platforms and apps to offer more efficient services. This includes providing easy access to information, real-time portfolio updates, and the possibility of online interaction and consultation. BRITech can assist your company in this regard.


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