There are myriad misconceptions about working with younger clients, many of which advisors are starting to see through, helping them tap a new client base.
That’s a good thing for all involved parties because it’s becoming increasingly apparent that Gen Zers need access to high-quality, professional financial advice. Indeed, that’s an endorsement of advisors, but it’s also a critique where young folks, women in particular, are accessing financial information and advice. You guessed it. Blame social media, TikTok in particular.
The app, which is spurring a slew of dubious financial advice, is widely embraced by young women and a recent survey of 625,000 Gen Z adults by marketing consultancy Sooth indicates women in the 18-24 age group are likely to be more inspired financially by Kendall and Kylie Jenner, Ariana Grande, Selena Gomez and Zendaya than they are to consumer “traditional financial advice” from advisors.
That jibes with other, arguably troubling research courtesy of Morning Consult, indicating 57% of Gen Zers believe they can make a living being social media influencers. Given that percentage, the grumpy middle-aged man in me says it’s time for parents to get involved, then financial advisors.
Keeping Up with the Kardashians
For the sake of this argument, throw Ariana Grande, Selena Gomez and Zendaya out of the equation because they are celebrities in the traditional sense, meaning clients should realize the odds of attaining such status are slim.
However, while Kendall and Kylie Jenner – the youngest sisters in the famous Kardashian clan – are famous in the strictest sense of the term, they are also accomplished businesswomen with considerable self-made wealth. Kylie, the proprietor of an eponymous cosmetics company, is worth an estimated $680 million. There’s inspiration to be drawn from that figure. No doubt, but it doesn’t mean Kylie Jenner is an expert financial planner. She probably has a registered investment advisor or two working for her.
“Financially aware Gen Zers are 62% more influenced by people they follow on social media than the national average, with their highest affinities being gamers, reality show stars, and fictional characters,” notes Sooth. “Yet, they are 61% less likely to be influenced by a financial expert on social media. Gen Z tends not to engage with people who purport to be leaders in financial services, choosing instead to look to people they see as successful, self-made female role models.”
It’s not a criticism of the Jenners or the other celebrities mentioned here, but with women becoming increasing economic forces, parents and advisors should help young women realize the value in old school financial advice.
Mind the Gap
The Sooth study also noted that Gen Z men named Nintendo of America president Reggie Fils-Aimé as their preferred financial influencer.
Alright, so Fils-Aimé isn’t Warren Buffett or Peter Lynch, but the reality is, he’s probably a better source of financial advice than a social media influencer or reality TV star, regardless of net worth. This divide is pertinent because Gen Z women are 15x more likely than the national average to consumer financial advice via social media, according to Sooth.
And that’s relevant to advisors because various data points confirm women across all age groups are struggling with pay gaps and investment education/knowledge gaps. Apparently, social media isn’t doing anything to help those situations.