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When they’re not typing ‘uwu’ into a text message, Gen Zers are busy learning from their elders’ financial mistakes.

Gen Z―those born after 1995―are now more than 20% of the US population and are the most diverse generation in US history. By 2020, they will account for 40% of the country’s consumers. They are the first generation to be considered true digital natives and report being online almost constantly, as described in a 2018 study by the Pew Research Center. Their front row seat to the Great Recession may have influenced their attitudes toward money, as they watched how it affected their parents and their family spending.

Gen Zers have seen their Gen X parents and elder sibling Millennials overspend and go into debt keeping up with their peers’ social lives on Facebook and Instagram, and are taking heed of what FOMO really costs. The most important factor for Gen Z when making a purchase is price (72%). Forty-seven percent use their phones in-store to check prices, along with asking family and friends for advice on what to buy.

They’re also just not into social media in the same way, having seen millennials be penalized for oversharing. While they are highly connected, spending up to 4 hours a day connected to the mobile internet, and check social media up to 100 times daily, they share comparatively less. Seventy-six percent of Gen Z believe that people share too much about themselves online, 87% say that keeping their posts private is more important than likes and shares, and 66% of Gen Z have translated belief into action by adjusting their privacy settings. Women have adjusted them 10% more compared to men.

According to a new study from The National Society of High School Scholars, Gen Z is saving money at a higher rate compared to previous generations at the same age. On average, they started researching financial planning at the tender age of 13, and 64% are currently researching it on their own or talking to someone about financial planning.

When it comes to education, they are seeking ways to minimize debt, by considering community college (39%) in addition to trade and technical schools (22%). In the class of 2017, the first Gen Z graduating class, the majority (88%) chose their major with future job availability top of mind. Fewer are willing or planning to take on student debt. Instead, 70% are paying as they go by working to help cover their college tuition.

Not racking up debt means Gen Zers are better positioned to save, and many of them are saving for major goals, like a car or college. Almost twice as many (60%) have a savings account compared to a credit card (32%). However, only 33% have health insurance, perhaps because they are earning income through gig economy jobs and part time work. Seventy-seven percent are earning extra money from freelancing, part-time work, or an earned allowance. Among Gen Z students, 35% report already owning their own business or planning to start one in the future.

Saving money means that Gen Z can afford to spend it in ways that are practical yet still meaningful to them. Gen Zers are estimated to have a spending power of between $29 billion and $143 billion―and they’re ready to spend it their way: independent, open-minded, and action-oriented. Unlike their Gen X parents, they have little brand loyalty, and will quickly seek out alternatives if they perceive a decrease in quality or have a poor customer experience. They also want meaningful interaction, not just a purely digital experience.

They’re willing to spend money on items, particularly food, that offer authenticity and are ethically sourced. Many believe this constellation of attitudes will continue the rapid increase in socially responsible investing (SRI) started by millennials. SRI currently accounts for $26 trillion, more than a quarter of all assets under professional management worldwide, according to a 2018 study from Harvard University’s Kennedy School of Government.

The best way to think of the Gen Z attitude toward both saving and spending is that they are highly pragmatic. For example, an exotic trip is near the bottom of their list of priorities, according to a 2017 survey by Lincoln Financial Group, which found that 71% of teens see investing their money in their futures to be a top priority.

So what’s the best way for advisers to reach Gen Z plan participants and potential clients? Remember that unlike millennials, Gen Zers tend to be more independent and private, preferring social platforms that offer greater privacy and that are time sensitive, like Snapchat and Instagram. They also consume vast amounts of content on YouTube, with 95% reporting that they watch YouTube videos and 50% saying they cannot live without it.

Advisor Take Aways:

What worked to market your services or your firm in the past isn’t going to continue working with the current generation. Give serious consideration to using video as a communication and marketing medium. Make your content short, entertaining, and mobile-friendly because the average attention span for Gen Z is now less than 9 seconds, and 80% of social media content is consumed on mobile devices. Focus on the practical value you can offer, provide a great customer experience, and use your authentic voice.

Just don’t be sus (suspicious) or extra (over the top).

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