Digitally fluent younger generations ‘reshaping’ wealth management

Generation Z and Millennial investors are reshaping wealth management by being digitally fluent, highly engaged, and more likely to express preferences based on personal values, according to a report from the CFA Institute.

Its global study of mass affluent, high net worth (HNW), and ultra HNW investors showed that while the demand for advice remained strong, the ways in which younger generations were seeking advice and the inputs shaping their decisions were changing.

More than 90 per cent of those surveyed reported using some form of financial advice, with Generation Z investors often beginning their investment journey through workplace plans or robo-advisers.

“This represents a prime opportunity for advisers to capture clients as they accumulate greater wealth and transition to full-service relationships,” the report stated.

Expectations and relationships

With the Great Wealth Transfer underway, younger investors’ expectations for advice, communication, and product choice differed “in significant ways” from the clients the wealth industry was built to serve.

“Young investors expect a model of advice that blends technology-enabled personalisation with human judgment, integrates holistic and life-centred financial planning, prioritises collaboration over delegation,” the report noted.

Advisory relationships were found to be shifting to become more proactive, transparent, and technologically sophisticated due to younger investors’ preference for digital communications, and being open to emerging products and innovations.

While younger investors continued to prioritise ethical and trustworthy advisers, the report stated they increasingly evaluated trust through functional and measurable criteria, rather than personal relationships, and sought advisers who demonstrated expertise, provided quantifiable results, and seamlessly integrated technology.

They also preferred advisers who allowed them to retain autonomy, reflected their values and backgrounds, and offered knowledge and tools that supported informed decisions.

The CFA Institute therefore argued that the adviser-client relationship was becoming a more holistic, collaborative, and educational partnership delivered through flexible, on-demand, and modular advice formats.

Investments and portfolios

Younger investors were more likely to hold cryptocurrencies, exchange-traded funds (ETF), and real estate in their portfolios, and showed strong demand for traditionally non-retail assets such as private equity, private credit, and sustainability-oriented investments.

Over 90 per cent of younger investors said it was important to align their portfolios with their personal values, while 43 per cent said they were interested in values-based or impact investments.

“Marked by their openness toward emerging products, technologies, and asset classes, young investors display a drive for continual learning and proactive discussions, as well as a desire for advisers who understand and can contextualise new developments,” the report said.

“Staying informed about emerging asset classes, fintech developments, and macro trends enables advisers to provide updated guidance that can reinforce the adviser’s role as a strategic, forward-looking partner who balances innovation with prudent advice.”

Adaption and engagement

To ensure they remain competitive, advisers were urged to scale communication though technology; deliver personalisation at scale, potentially supported by AI technologies; and expand the scope of their advice to offer holistic planning and education.

While the report described the client acquisition and retention landscape as “challenging”, it outlined five ways advisers can increase their appeal to the next generation of investors.

It urged advisers to offer holistic, life-centred financial planning; build behavioural coaching into the advisory process; redesign communication models for high-frequency engagement; blend AI with human insight; and continuously adapt to new trends and product innovations.

“The rise of Millennial and Gen Z investors marks the next chapter in global wealth,” the CFA Institute said.

“These investors are confident, connected, and values driven. They seek advisers who provide frequent and consistent support during key moments in their financial journey.

“Those professionals who understand and adapt to young investors’ wants and needs today will shape the future of investment advice tomorrow.”

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