Financial services for the next gen

Financial advisors are at a crossroads. The industry is evolving rapidly, driven by technological innovation and changing consumer behaviors. As a member of the baby boomer generation, I have seen it all — from paper-based marketing, sales and purchasing transactions to seeing my financial information on a single dashboard with live updates and doing Zoom calls with my advisor. Younger generations — Generation X, millennials, and Generation Z — are playing a key role in reshaping the demand for financial services. Understanding their distinct financial habits and preferences is crucial for advisors who aim to remain relevant in this dynamic landscape.

Gen X: Bridging traditional and digital finance

The generation that followed the boomers, Gen X (those born between the mid-1960s and early 1980s), has witnessed the digital revolution firsthand. This generation balances traditional financial practices with a growing acceptance of digital solutions. They are also the first generation to retire under the shift to 401(k)s. Many are currently rethinking their retirement and may end up working longer than they had originally planned. Gen Xers generally are comfortable managing their investments online but also value the personal touch of human advisors, particularly for complex financial decisions such as estate planning or retirement strategies.

For financial advisors targeting Gen X, understanding their retirement concerns and blending digital convenience with expert, personalized advice can be a winning strategy.

Millennials: The tech-savvy investors

My older daughter’s generation, millennials, born from the early 1980s to the late 1990s, are the first truly digital-native generation. They grew up in an era of smartphones and social media, which influences their approach to finance. Many millennials prefer using apps for daily transactions and are comfortable using online platforms for investing through robo-advisors such as Betterment or Wealthfront. These tools offer a low-cost, accessible entry point to investing, aligning with millennials’ preference for efficiency and autonomy. However, the personal element also is not lost on this generation — most still seek financial advisors for major financial decisions or when navigating life changes such as buying a home or planning for a family. For advisors, offering a mix of high-tech solutions and high-touch personalized guidance could effectively meet the nuanced needs of millennial clients.

Gen Z: The future of finance

My younger daughter’s generation, Gen Z (born from the late 1990s through the 2010s), is entering their financial formative years with even more technological fluency than millennials. This generation is more likely to use digital wallets and invest in cryptocurrencies. They are drawn to platforms that offer instant, transparent and mobile-first services, reflecting their preferences for immediacy and innovation. While I had preached saving and investing to my kids from an early age, my younger daughter took that advice and signed up to start investing online. The service she used offered both human advisors and a robo-advisor component.

Studies have shown that Gen Z shows a surprising interest in financial literacy, expressing a keenness to learn about managing and investing money effectively. This is certainly true of both of my daughters. This opens an opportunity for advisors to engage through educational content delivered via platforms that resonate with this generation, such as YouTube or Instagram.

The crucial role of human advisors

Across generations, while the adoption of digital tools is high, the importance of human advisors remains significant. Most young people still recognize the value of personalized advice, especially for complex financial situations that require expert understanding or a strategic approach. Financial advisors are increasingly expected to offer more than just investment guidance — they must be coaches, educators and partners in their clients’ financial journeys.

Adapting to serve the next generation

The financial services industry must continue to adapt by integrating technology with traditional advisory services. Embracing technological solutions — including artificial intelligence — that automate routine tasks can free up advisors to focus on providing strategic, tailored advice where they add the most value.

For financial advisors, the challenge is to understand and embrace the diverse preferences of younger generations. By leveraging technology and maintaining the irreplaceable human element, advisors can meet the evolving needs of Gen X, millennials and Gen Z. 

John Forcucci is InsuranceNewsNet editor-in-chief. He has had a long career in daily and weekly journalism. Contact him at johnf@innemail.