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Financial Advice: How To Reach "GenNext" – Study

Editorial Staff

26 February 2024

has just published a new study on GenNext (Americans aged 18 to 34) which found that more than three-quarters (78 per cent) of them do not work with a financial advisor, suggesting the industry needs to consider its offerings to tap into the space.

In partnership with Next360 Partners and MarketCast, Edward Jones set out to define this age group numbering more than 76 million Americans – 'GenNext' – and what matters most to them across all aspects of their lives.

“With most worried about rising costs and an inability to save, this will have vast implications for the wealth management industry. Our purpose calls us to identify how we might help this age group plan and reach their life goals – across health, family, purpose and finances,” Lena Haas, head of Wealth Management Advice and Solutions at Edward Jones, said.

Who are GenNext?
GenNext is a unique cohort, coming of age under unprecedented circumstances, the authors of the report said. Some of these defining factors include:

-- Diversity: They are extremely diverse – half identify as non-white and 17 per cent as LGBTQ or prefer to self-describe their sexual orientation.

-- Education: Highly educated, between one and three GenNext have some college education, while one in four have a bachelor’s degree or higher. They consult many sources to learn, plan and act.

-- Life events: Many have experienced or aspire to experience traditional life events such as marriage or home ownership, including eight in 10 who have or want children, but are still juggling jobs, school, gig work and other priorities.

-- Face-to-face connections: Although GenNext has grown up with the internet, they value and prioritize meaningful interactions as contributing to their own personal wellness. Allied to that, a third (31 per cent) ranked mental health as the most important contributor to wellness.

-- Comfort above all: As their main priority, they want enough money to have a meaningful life, but view the pursuit of purpose, not financial accumulation, as the main value of a career.

Although they may have a clear picture of what they want their lives to look like in the next five years, only one in three (36 per cent) are prioritizing finances to get there.

A different approach to work and money
Despite their limited time in the workforce, nearly one in five (19 per cent) have experienced being laid off from a job. While they think positively about retirement, GenNext doesn’t expect to enjoy the same level of financial stability as their parents or grandparents – and only 31 per cent currently have a retirement account.

The career ladder no longer exists for them – they are instead planning for what the research refers to as “pogo stick careers,” where they are highly mobile and move from one job to another. Comfortable wearing multiple hats, many GenNext are looking for “side hustles” to fund their lifestyles outside basic expenses. Only one in 10 (13 per cent) associate a career with success and achievement.

“They want flexibility in where and when they work, and are open to non-traditional career paths,” Haas added. “Naturally, this group will have diverse financial needs impacting how they save, spend and invest. It was important for us to understand their needs and encouraging to see that they are open to advice where there may be gaps.”

Surviving before thriving
GenNext cited a short-term mindset when it comes to finances, focusing on everyday expenses, budgeting and saving for large purchases over other financial matters. Only one in 10 (13 per cent) have paid off college debt, only about half (57 per cent) have health insurance and less than a third (27 per cent) have life insurance. Only 12 per cent of this cohort go to a financial advisor to discuss their finances. The majority (52 per cent) speak with their parents. Despite common misperceptions, only 20 per cent reported using social media or influencers as sources of financial guidance among the many other perspectives they seek.

The future of advice for GenNext
Although more than three-quarters (78 per cent) of GenNext do not currently work with a financial advisor, 41 per cent of those who don’t say they plan to someday, and 68 per cent view financial advisors as a sounding board for ideas. Even though they are the digital generation, 66 per cent of GenNext prefer in-person interactions with their financial advisors. Coughlin notes that, “GenNext are ushering in new expectations for the future of advice, one that is not digital alone but omnichannel, goes beyond financial discussions and where personal is premium.”

“Working with a financial advisor can improve your financial knowledge and confidence and help you feel more in control,” added Haas. “Our research found that 68 per cent of GenNext don’t think they have enough income or savings for professional financial advice. But it’s never too early to get started. Financial advisors can remove burden and complexity and help you focus on the most important next steps.”