How Millennials and Gen Z are transforming financial advice

By Blake Kannady, CPO, intelliflo

The past couple of years have been acceleratory in many ways. Trends that were gaining momentum before 2021 are suddenly ubiquitous. A quick scroll through TikTok and content comes pouring in from fellow Millennials, as well as Gen Z, espousing “passive income” this and “cashflow planning” that. We are also seeing a significant rise in disparate and non-traditional income sources, leading to an increase in the use of alternative channels for financial advice. So, what does this all mean for traditional financial advisors?

The rise in cash-flow planning

Even before the pandemic, Millennials had been reevaluating the idea of careerism as the gig economy and digital work changed options and preferences. Gen Z have embraced the side-hustle culture as well, entering the workforce a few years ago in a very different way than generations past. In September 2021, demand staffing platform Wonolo found that Millennials make up the largest percentage of gig workers on its platform, at 53%, followed by Gen Z at 22%. And even though this trend is popular with younger generations, it is not unique to them. The arrival of Covid-19 and full-time remote work has sped retirement for Baby Boomers, while Gen X are shifting their attitudes toward work in droves. As a result, many are departing the traditional 9-5 work environment in favor of greater fulfillment and/or balance.

This shift in work patterns is naturally changing the way people are planning their finances. Long gone are the days when a generic, static retirement plan signaled financial wellness. Today, consumers are looking for flexibility and freedom, as well as the opportunity to be engaged at every step of the financial planning process. As a result, cashflow planning has become a strong option.

Cashflow planning technologies engage clients in real-time conversations by presenting their finances in a digital format, displaying a mix of financial content and personal insights, and allowing them to interact with inputs. These tools push consumers to set near-term, achievable goals, based on their present life events, rather than distant and abstract objectives – a far more attractive approach for young investors who seek immediate gratification. Lastly, these platforms unify disparate data for the purpose at hand and can scale to a client’s complexity.

To remain competitive, it is time for traditional financial advisors to evolve financial advice delivery and invest in modern cashflow planning technologies. This will help them align their value with what today’s consumers are looking for and the dynamism they need, while also building more personable and trusting long-term relationships with their clients. Furthermore, from an operating standpoint, these technologies are more performance and cost-effective than traditional retirement plans.

The growth of alternative financial advice channels 

Financial advisors are no longer only competing with traditional advisory firms but also with retail trading apps, social media platforms and ecommerce platforms, which are winning on engagement. Don’t we all, to some extent, gravitate toward simplicity, convenience, and a tailored experience?

Many younger investors are entering the retail trading market with Acorns and Robinhood. Self-directed accounts at major custodians are up, and skewing younger as well, while individual equity interest is at an all-time high. People crave to feel empowered and in control of their financial futures. Platforms that are most cost efficient and user-friendly will continue to attract liquidity and grow.

Social media platforms are becoming an increasingly popular destination for financial advice. A study by LendingTree’s MagnifyMoney unit found that over 40% of Gen Z had turned to TikTok for investment information within the previous month. A content creator with a large and loyal following on Instagram and YouTube can have an inordinate amount of influence despite their actual credentials or knowledge base.

Embedded finance presents another emerging trend to watch.  Millennials and Gen-Z have grown up with trusted ecommerce brands, and many of these companies are attempting to break into the financial services market through embedded finance offerings. These convenient, all-in one services carry significant appeal, which is something traditional financial advisors must consider. If we don’t meet people where they are, we are often missing the opportunity to form a relationship.

It’s time for traditional financial firms and advisors to invest in modern digital wealth technologies and undertake the transformations needed. The level of accessibility and personalization that social apps and ecommerce platforms present are the benchmark. Technology can and should provide value beyond typical consumer rewards, transforming pools of assets into prospect opportunities as well. And let’s face it, although financial advice content is fast and convenient, it cannot compete with the human connection and guidance that a financial advisor brings to the table. Financial advisors have a strong opportunity to widen access to financial advice and educate the younger generation to be financially healthy from an early age.

Consumer preferences and technology advances are changing the financial advisory experience. Advisors must be able to meet Millennials and Gen Z where they are, which is on their digital devices. As a result of these pressures, 2022 will be a powerful year for digital transformation, empowering advisors to streamline and optimize processes while more effectively serving the new generation of investors and empowering them to strengthen their financial health.

About Author:

Blake Kannady is chief product officer of intelliflo, a single, API-driven platform that manages the end-to-end advisory experience for organizations of all sizes. Please visit https://www.intelliflo.com/us for more information.

By Blake Kannady, CPO, intelliflo

The past couple of years have been acceleratory in many ways. Trends that were gaining momentum before 2021 are suddenly ubiquitous. A quick scroll through TikTok and content comes pouring in from fellow Millennials, as well as Gen Z, espousing “passive income” this and “cashflow planning” that. We are also seeing a significant rise in disparate and non-traditional income sources, leading to an increase in the use of alternative channels for financial advice. So, what does this all mean for traditional financial advisors?

The rise in cash-flow planning

Even before the pandemic, Millennials had been reevaluating the idea of careerism as the gig economy and digital work changed options and preferences. Gen Z have embraced the side-hustle culture as well, entering the workforce a few years ago in a very different way than generations past. In September 2021, demand staffing platform Wonolo found that Millennials make up the largest percentage of gig workers on its platform, at 53%, followed by Gen Z at 22%. And even though this trend is popular with younger generations, it is not unique to them. The arrival of Covid-19 and full-time remote work has sped retirement for Baby Boomers, while Gen X are shifting their attitudes toward work in droves. As a result, many are departing the traditional 9-5 work environment in favor of greater fulfillment and/or balance.

This shift in work patterns is naturally changing the way people are planning their finances. Long gone are the days when a generic, static retirement plan signaled financial wellness. Today, consumers are looking for flexibility and freedom, as well as the opportunity to be engaged at every step of the financial planning process. As a result, cashflow planning has become a strong option.

Cashflow planning technologies engage clients in real-time conversations by presenting their finances in a digital format, displaying a mix of financial content and personal insights, and allowing them to interact with inputs. These tools push consumers to set near-term, achievable goals, based on their present life events, rather than distant and abstract objectives – a far more attractive approach for young investors who seek immediate gratification. Lastly, these platforms unify disparate data for the purpose at hand and can scale to a client’s complexity.

To remain competitive, it is time for traditional financial advisors to evolve financial advice delivery and invest in modern cashflow planning technologies. This will help them align their value with what today’s consumers are looking for and the dynamism they need, while also building more personable and trusting long-term relationships with their clients. Furthermore, from an operating standpoint, these technologies are more performance and cost-effective than traditional retirement plans.

The growth of alternative financial advice channels 

Financial advisors are no longer only competing with traditional advisory firms but also with retail trading apps, social media platforms and ecommerce platforms, which are winning on engagement. Don’t we all, to some extent, gravitate toward simplicity, convenience, and a tailored experience?

Many younger investors are entering the retail trading market with Acorns and Robinhood. Self-directed accounts at major custodians are up, and skewing younger as well, while individual equity interest is at an all-time high. People crave to feel empowered and in control of their financial futures. Platforms that are most cost efficient and user-friendly will continue to attract liquidity and grow.

Social media platforms are becoming an increasingly popular destination for financial advice. A study by LendingTree’s MagnifyMoney unit found that over 40% of Gen Z had turned to TikTok for investment information within the previous month. A content creator with a large and loyal following on Instagram and YouTube can have an inordinate amount of influence despite their actual credentials or knowledge base.

Embedded finance presents another emerging trend to watch.  Millennials and Gen-Z have grown up with trusted ecommerce brands, and many of these companies are attempting to break into the financial services market through embedded finance offerings. These convenient, all-in one services carry significant appeal, which is something traditional financial advisors must consider. If we don’t meet people where they are, we are often missing the opportunity to form a relationship.

It’s time for traditional financial firms and advisors to invest in modern digital wealth technologies and undertake the transformations needed. The level of accessibility and personalization that social apps and ecommerce platforms present are the benchmark. Technology can and should provide value beyond typical consumer rewards, transforming pools of assets into prospect opportunities as well. And let’s face it, although financial advice content is fast and convenient, it cannot compete with the human connection and guidance that a financial advisor brings to the table. Financial advisors have a strong opportunity to widen access to financial advice and educate the younger generation to be financially healthy from an early age.

Consumer preferences and technology advances are changing the financial advisory experience. Advisors must be able to meet Millennials and Gen Z where they are, which is on their digital devices. As a result of these pressures, 2022 will be a powerful year for digital transformation, empowering advisors to streamline and optimize processes while more effectively serving the new generation of investors and empowering them to strengthen their financial health.

About Author:

Blake Kannady is chief product officer of intelliflo, a single, API-driven platform that manages the end-to-end advisory experience for organizations of all sizes. Please visit https://www.intelliflo.com/us for more information.