Empowering Gen Z with financial literacy

By Erin Slater

As the oldest members of Generation Z enter their late 20s, many know they need to prioritize financial well-being, but they don’t always know where to start.

While this generation has demonstrated a strong desire for independence, especially in financial matters, Gen Zers typically have been thinking about insurance policies and premiums only for a handful of years — if they’ve been thinking about them at all. Gen Z scored the lowest of all generations in financial literacy in a 2023 survey from TIAA Institute and the Global Financial Literacy Excellence Center at the George Washington University School of Business, so there is ample room for education.

It’s clear that as today’s twenty-somethings enter the market as the newest insurance consumers this generation has a significant need for — and interest in — financial literacy resources. The gap between what Gen Z knows they need and what they actually know creates an opportunity for marketers at insurance brands to establish and nurture lasting connections by offering Gen Z informative, creative and high-value intel about how to manage their money.

Brands that respond to this need with smart and personalized content will have the greatest opportunity to build brand awareness and foster trust with these younger buyers. They’ll also help deliver to Gen Zers the education and information that can help them become more responsible with their finances — and that can turn them into loyal financial services consumers.

Gen Z: A generation shaped by distinct economic conditions

Gen Z is experiencing economic conditions like none before them. This generation has been experiencing the impact of intense inflation in recent years. Today the costs of housing, cars and other “basics” of adult life have become difficult to afford on early-career salaries alone. That likely explains why 68% of young adults ages 18 to 25 say that they received financial help from their parents in the past 12 months.

As a result, Gen Z’s needs are different from those of older generations when they were the same age, and Gen Z has a strong desire for stability.

Younger cohorts of Gen Z make and use money in very distinct ways compared to previous generations. They’re more pragmatic about their financial choices and make more cautious decisions about spending. For example, more than other generations, Gen Zers seem to fear and may even avoid taking on debt, including credit cards and loans for post-secondary education. As much as 77% of Gen Z earn extra money through freelance work, a part-time job or earned allowance, and 33% already have health insurance.

Because Gen Zers have little room to make careless choices, they’re passionate about being empowered in managing their finances. That opens the door for insurance brand marketers to establish relationships with what could become longstanding customers.

Building a Gen Z consumer base driven by brand trust

Given the desire of Gen Zers to learn about finance — and the dearth of educational information they’ve received to date on this subject — there’s a natural opening for insurance brands to align their content to Gen Z’s priorities by focusing on how to build their financial literacy.

Well-crafted and data-driven content marketing that’s designed with the audience in mind — including voice, tone and visual execution— can engage young buyers. Capturing attention is just the first step, though. This audience is really looking for trustworthy resources. To earn that coveted place as a trusted source for financial literacy, and build lasting relationships with Gen Z, insurance brands can take these three steps:

Start with a foundation of authentic, values-driven messaging.

Gen Z is more values- and social-driven than previous generations. Look to connect insurance considerations to Gen Z goals and values — and ensure those values align with the ones espoused and lived by the brand. This generation won’t be fooled by words that aren’t backed up by actions.

Gen Z is especially passionate about sustainability issues. Research from First Insight shows that 62% of Gen Z shoppers prefer to buy from sustainable brands, and 73% are willing to pay more for sustainable products. Brands that are sincerely committed to sustainability can stand out in a crowded market and influence consumer choices.

2. Personalize content and anticipate needs.

As many as 72% of consumers consider personalization crucial for financial marketing, but no consumer segment has higher expectations on this front than Gen Z. Having grown up with hyper-targeted digital and mobile ads, they expect content to be relevant to them personally. This means the financial literacy resources an insurance brand creates for Gen Z must align to their specific insurance journey and needs.

Gartner predicts that by 2025, companies that excel in personalization will outsell those that don't by 20%. Strong, resilient, insightful data — down to the level of the household that reveals personal passions and interests — can be extraordinarily powerful in helping inform creative content that will feel targeted, specific and relevant to a Gen Z recipient.

Gen Z is special, too, in that this cohort is looking for brands to deliver an experience that answers a need (or desire) that may not have even been expressed yet. To anticipate emerging and unspoken needs, insurers will do well to stay very close to data about this unique generation. Insurers must understand how that data intersects with individual life journeys, too, so they can ensure their brand is ahead of and in service to a Gen Z consumer’s most pressing needs.

Financial services marketers also must continue tweaking their marketing strategies based on customers’ emotional motivations for their financial transactions. (Consider, for example, the way Gen Z’s financial decisions can be driven by anxiety around recent economic turbulence and a desire for stability.)

3. Deepen a non-negotiable digital-first experience with in-person connections.

More than 40% of Gen Zers and millennials say they turn to social networks for financial advice. That means brands that want to engage Gen Z and offer them financial resources must be there, too.

As digital natives, Gen Zers have high expectations for digital capabilities and low tolerance for friction in their user experiences. Digital-first and mobile-first strategies are imperative for engaging Gen Z, and this requires a shift toward immediate engagement and effective communication within the constraints of a smartphone display. Many financial brands are leveraging fintech partnerships to ensure optimized experiences – such as Lemonade partnering with Stripe for more efficient payment transactions for its customers.

While digital integration is a clear expectation of this generation, it’s vital for insurers to recognize that Gen Zers are really looking for integration when it comes to financial services. According to the Oliver Wyman Forum, Gen Z wants the best of digital convenience along with the peace of mind of physical locations and “IRL” experiences.

This may be even more true when it comes to sensitive topics like life insurance or property and casualty insurance. McKinsey reports that agents and advisors are the highest rated channel for driving customer satisfaction, with 20% of survey respondents saying they would switch insurers if their advisor left. These personal relationships, facilitated by brick-and-mortar locations, will be central to creating long-term Gen Z customers.

Offer trusted insight and targeted relevance

Gen Z is a big, emerging consumer base that insurance brands should pay attention to now, before loyalties start to form. To win with these young consumers, insurance brands need to meet them where they are, with values-driven resources that are creatively aligned, personalized to their challenges and needs, and delivered at the channels best suited to this audience.

As they build out their financial resources, brands should remember that engaging Gen Z requires technology and social savvy well beyond what has been expected by other demographics. Resources must not only be created with personalization to Gen Z in mind but also be delivered to Gen Z where they already are (such as YouTube, TikTok, Instagram) in a seamless, integrated experience. Leveraging the most recent data available to keep up with those trends will go a long way.

By being sensitive to this generation’s unique characteristics, brands can offer value to Gen Z and position themselves as trusted sources. In doing so, they will establish trust with this audience and build brand awareness while offering them the resources they crave – a true strategic win-win. And this trust matters even more when it comes to major life decisions such as insurance. A brand that offers trusted guidance is sure to have Gen Z coming back to them time and again as they navigate the complex world of insurance, make crucial decisions and pursue future needs to protect their most important assets.

Erin Slater is head of financial services strategy with Quad. Contact her at [email protected].