The Great Wealth Transfer: What Does It Mean for Financial Services and Gen Z?

Author: Lucy Cooper - MyPocketSkill

The UK is experiencing a monumental wealth transfer, with an estimated £7 trillion set to pass between generations over the next 30 years through inheritance, gifting and intergenerational wealth planning. In the US, it's an astounding £73 trillion.

For financial services firms, this represents a massive market opportunity...and threat. One that’s not just about managing large sums of wealth but understanding and adapting to the unique needs of a new generation of clients, including Millennials and Gen Z.

Who’s Inheriting The Wealth?

• Millennials (born 1981–1996) and Gen Z (born 1997–2012) have grown up in a digital-first world, making them more comfortable with online financial tools like budgeting apps, mobile banking and digital investing platforms. In contrast, older generations were more reliant on traditional financial advisors and institutions.
• The distribution of wealth is also becoming more diverse, with an increasing number of women, minority groups and entrepreneurs among those set to inherit significant assets. Financial services firms must cater to a broader spectrum of clients offering tailored solutions that meet a variety of financial needs.

What Matters Most To Gen Z When It Comes to Money and Finance?

Here are the key traits and trends that financial services firms need to understand about Gen Z:

1. Tech-First, Digital-Only Approach

Gen Z trusts technology, especially if it simplifies their lives. Financial firms need to offer intuitive, digital-first solutions for managing wealth. They expect seamless, instant access to financial services and have little patience for outdated systems. Mobile-friendly platforms, robo-advisors, and AI-driven solutions will be crucial in attracting this generation however supplementing it with human support is still important.

2. Ethical and Purpose-Driven Investing

Gen Z is deeply committed to social and environmental issues, from climate change to income inequality. They are more likely to align their investments with their values, making ESG (Environmental, Social, and Governance) investing an important proposition for financial services firms. If you’re not offering sustainable investment options, you risk losing relevance with this generation.

3. Financial Education and Empowerment

Gen Z is proactive about financial education. Unlike older generations, they seek out financial knowledge via digital resources, social media, and peer groups. They prioritize transparency and accessibility when it comes to financial advice. Financial services firms should provide clear, digestible information that helps them make informed decisions about budgeting, investing, and saving.

4. Financial Independence and Security

Having witnessed economic instability from the 2008 financial crisis to the COVID-19 pandemic, Gen Z values financial security above all. At MyPocketSkill, we see how entrepreneurial many Gen Z individuals are, with a keen interest in side hustles, cryptocurrencies, and future-saving. Offering flexible, secure and transparent financial products will resonate with this generation.

The Role of Financial Services in the Wealth Transfer

The intergenerational wealth transfer presents both a challenge and an opportunity for financial services firms. To capture this and stay relevant, financial institutions must adapt in several key areas:

1. Build Trust with Younger Generations

Trust is crucial for younger investors, many of whom are skeptical of traditional financial institutions. To build trust, financial services firms need to be transparent, ethical and accountable in their dealings. Some firms may need to overhaul their branding and customer engagement strategies to connect with this new wave of clients.

2. Keep Pace with the Digital Transformation in Financial Services

The rise of online wealth management platforms and mobile apps means financial services firms must keep pace with technological advances. Investing in user-friendly interfaces, data analytics and AI-powered support will help attract tech-savvy younger clients.

3. Adapt to New Client Expectations

Younger clients expect advisors to understand not only their financial goals but also their personal values. Financial institutions must leverage technology to provide tailored advice, including ethical investment options and personalized financial planning.

4. Offer Holistic Wealth Management

The future of wealth management will be more comprehensive. As younger generations inherit wealth, they’ll need more than just investment management—they’ll need integrated financial planning that includes tax strategies, estate planning, insurance and retirement savings. Firms must build teams that can offer these services in a cohesive manner.

5. Address Diversity and Inclusion

Wealth is becoming increasingly diverse across gender, race and culture. Financial institutions must ensure their services are inclusive and meet the specific needs of a more varied client base. This includes not only offering services that align with different financial priorities but also fostering diversity within financial institutions themselves.

Conclusion: Seizing the Opportunity with Gen Z

The Great Wealth Transfer represents a once-in-a-lifetime opportunity for financial services firms to engage with a new generation of investors. To succeed, firms must understand Gen Z’s financial attitudes, preferences and expectations to adapt quickly and stay relevant.

By aligning offerings with Gen Z’s values, financial services can foster stronger relationships and secure a place in the next generation of wealth management. The firms that adapt to Gen Z’s preferences will continue to grow in the decades to come.

For more information on how MyPocketSkill can help you understand GenZ's attitudes to money and finance, visit our Gen Z Research Agency.