The financial assets of millennials and Generation Z are not to be sniffed at. These younger cohorts saw their assets grow the fastest over the past three years, according to a Cerulli Associates report.

The “2024 Cerulli Edge Retail Investor” report noted that Gen Z, the youngest of the cohort who have reached adulthood, gained nearly $6 trillion in financial wealth at the end of 2022, an annual growth rate of 40%, according to Cerulli’s research, based on the Federal Reserve’s last “Survey of Consumer Finances” in 2019.

The gains were in part due to young people’s large increases in stock ownership and home buying, Cerulli said, noting that more than half of millennials and Gen Z (55%) had retirement accounts through their employers or some other source by the end of 2022, which represents a six percentage point jump from 2019. “Additionally, the retail trading boom of the early 2020s affected this group the most.” Twenty-two percent now say they own individual stocks, up from 13%, while 9% own pooled assets such as mutual funds and ETFs, up from 6%, Cerulli said.

“At 44 million households strong—and counting—this younger cohort increasingly is becoming impossible to ignore,” said John McKenna, a Cerulli research analyst, in a statement. “With their financial wealth growing at a massive rate alongside the complexity of their assets, they are prime candidates for formal advice relationships beyond just a brokerage account and a local bank teller. As the retiree and near-retiree markets become more saturated, younger investors represent a chance for advisors to build relationships that could last through five decades, growing in wealth each step of the way.”

The younger generation also took advantage of becoming homeowners more so than the average American in the past three years. Cerulli said 53% of this demographic, an increase of five percentage points from 2019, moved from being renters to homeowners, the biggest percentage Cerulli has seen since tracking them.

Cerulli pointed out that in the wake of the pandemic, many people moved from urban areas to the suburbs and to rural areas where home prices were lower and interest rates were at historic lows. “Particularly for millennials who had been saving to buy a first home and start a family, the last three years represented a prime opportunity to enter the housing market,” the report said.

But Cerulii added that, with the high price of housing due to demand and rising interest rates, “it remains to be seen whether higher mortgage rates and home prices will hamper millennial and Gen Z homeownership and if their increased savings and wealth will be enough to overcome these challenges.”

Cerulli said asset managers should take note that younger generation advisors and financial planners will identify with the “unique challenges” of millennials and Gen Zers and will deliver the best advice and solutions.

“While these younger investors might not be the wealthiest cohort today, advisors willing to take the leap could be rewarded with long-term clients and a strong competitive advantage as older households fully enter the decumulation phase of their lives,” McKenna said.