Gen Z Prefers to Do It Themselves

Different strokes for younger folks.

Kids entering adulthood today have different priorities than older generations. Every meal gets a photo, books are listened to instead of read, and job-hopping is expected. The same goes for money management, as Gen Z prefers a more DIY approach.

The group, born from 1997 through 2012,  is the only one that trusts self-directed platforms more than financial advisors, according to research from SIFMA and KPMG. That doesn’t mean they don’t want guidance, but advisors will need to adapt to their hands-on style. “Retail platforms have invested a lot in user experience that creates trust, whereas professional financial platforms are decades behind,” said Landon Tan, founder of Query Capital. “There are potential pitfalls with self-directed investing, and people don’t always realize when they’re taking excessive risk.”

Hands On

Traditional wealth managers typically seek clients who already have substantial assets, but self-directed platforms like Robinhood, which requires only $1 to start investing, appeal to younger investors. Technology has also boosted investor confidence, said Crystal McKeon, CFP at TSA Wealth Management. “Selecting a balanced customized portfolio used to be very difficult, confusing and overwhelming for most everyday investors,” she told Advisor Upside. “With today’s technology, an investor can answer a few questions and get a decent portfolio customized to them.”

Some advisors even encourage clients to explore self-directed accounts. “If they’re curious about particular stocks and are emotionally and financially OK with the value plummeting to zero, it can be ‘play money,’” said Sam Mockford, associate wealth advisor at Citrine Capital.

The study also found:

• Roughly 75% of boomers focus on investment returns and performance, while only one-third of Gen Z feels the same.
• Instead, 41% of Gen Z prioritizes transparency, and nearly half emphasize digital capabilities, factors that matter to fewer than 10% of boomers.

To stay competitive, advisors are shifting focus from portfolio management to more comprehensive client services like financial planning, tax strategies, estate coordination, and communication among service providers, McKeon added.

Roll the Dice. Still, Gen Z’s do it yourself approach can be risky. Stifel CEO and incoming SIFMA Chair Ronald Kruszewski cautioned that technology’s accessibility has blurred investing and amusement. “Technology has given younger investors extraordinary access, but it’s also brought gambling impulses into investing,” he wrote in Barron’s. “Investing was never meant to be entertainment.”

But if young people can’t get their entertainment from trading, then what? Their only other options are Netflix, PlayStation, Spotify, YouTube, TikTok, Hoopla, Audible, Prime Video, Disney+, Xbox Game Pass, the library, the outdoors …

Choices, choices.