Millennial and Generation Z financial wealth jumped 25% in 2021, according to a new study by Cerulli Associates.
Millennials, defined as those born between 1981 and 1996, and Generation Z, those born between 1997 to 2012, have been steadily growing their wealth, the research firm said. In 2021, their aggregate assets soared from $2.9 trillion to $3.6 trillion, the most of any generational group, said Scott Smith, a director at Boston-based Cerulli, in a statement.
Though this total is still smaller than the combined assets owned by older baby boomers and Generation Xers, the younger generations are “making strides early on in their investment journey and are eager for comprehensive financial advice,” Cerulli said a press release.
Advisors who may be accustomed to older clients will need to adapt and focus on their younger counterparts if they hope to build long-term relationships and maintain sustainability, Cerulli said.
Moreover, these younger generations are projected to inherit some $30 trillion to $68 trillion from their baby boomer parents.
The intergenerational wealth transfer is just one reason why next-generation clients want more financial advicem but they sometimes have trouble defining exactly what they want, Cerulli said. “Rather than strategically choosing from a logical menu of potential services from each provider, investors more often end up selecting providers on a just-in-time basis, resulting in ad hoc collection of relationships, each of which falls short of delivering comprehensive financial advice engagement,” said Smith.
According to the Brookings Institute, more than half of Americans living today are millennials or younger.
Fifty-nine percent of the millennials surveyed by Cerulli said they want more financial advice than they currently receive.
It won’t be long before these next-generation clients become a huge part of the financial-services market, Smith said. The “growing market share and mindshare among millennials and Generation Z can’t be ignored,” he said.