The investment world has long been characterized by images of stately men in suits catering to other stately men in suits. Seldom do most of us immediately appreciate the reality of modern investing: the fact that Wall Street not only continues to strive for a more equitable gender balance amongst its traders and investors, but that its clients extend far beyond any one type. Indeed, one of the fastest growing crops of willing spenders is one often believed too young and too inexperienced to have much financial power. The reality, however, is that members of Generation Z, those people born from the mid-1990s through the mid-2000s, have quietly and quickly amassed $29 billion in spending power. To harness the potential of this influential group, investors are starting to observe and cater to the Gen Z mindset. Here are some of the trends we’re seeing:
A Focus on Experience
Using multiple research techniques (such as surveys and indepth interviews), The Center for Generational Kinetics found that “77% of Gen Z currently earns their own spending money through freelance work, a part time job, or earned allowance.”
It seems the majority of Gen Zers are already working in some capacity, demonstrating that they respect hard work and consider it a way to learn, as well as to make money. In fact, “75%… say college isn’t the only way to get a good education,” with “85% […having] watched at least one online video in the past week to learn a new skill.” Keeping this in mind, more investors are offering experiential gamification tools that make investing fun, interactive and instructional. It not only appeals to Gen Z’s desire for experiential learning, it also caters to their technological skills.
A Turn Towards Influencers
Because Gen Z has grown up in a world dominated by social media, its members necessarily use online information to help them find and use new products. Celebrity endorsements and other personalized content hold great weight with them as they make their purchasing decisions. Thus, investors are beginning to monitor the website presence of influencers with large social media followings and making some of their own investment decisions according to the products those influencers promote because they know Gen Z is probably doing the same.
A Conservative Approach
Finally, members of Gen Z have only experienced a post 9/11 world. Their lives have been dominated by ongoing military conflict, as well as the effects of the Great Recession of 2008. As a result, they especially value freedom and stability, wanting to safeguard their education, health and money despite the costs. Investors are capitalizing on this attitude by providing opportunities for micro-investing via online applications. These apps allow users to invest smaller amounts of cash yet still learn the basics of sound financial management. In this way, Gen Zers can maintain more financial security, making it more likely that they will invest at least a little bit.
Disclaimer: This content does not necessarily represent the views of IWB.