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Advisors looking to talk to Gen Z and attract them as an audience must be where they are and speak how they speak.

The wealth management industry risks losing a significant portion of prospective Generation Z clients if it doesn’t get up to speed on this demographic’s unique characteristics. One prominent example is Gen Z’s penchant for investing in new asset classes such as cryptocurrencies.

Most advisors are either baby boomers or members of Generation X, which makes it difficult for them to relate to a group as connected to the digital world from the get-go as Gen Z. So, naturally, the fundamentals for investing in this space make more sense to these young adults than the antiquated rules governing what they see as the elitist wealth management space.

A recent Engine Insights study found that 59 per cent of Gen Z investors believe they will become wealthy by investing in cryptocurrencies. That’s in stark contrast to the 31 per cent of all adults, including those members of Gen Z surveyed, who have the same belief. And headlines focusing on a few members of this group becoming crypto millionaires are influencing the rest of the pack.

That sets up an opportunity for wealth advisors.

The fundamental value proposition of wealth management is to help preserve, allocate, and build wealth. Gen Z is utilizing its understanding of the digital world to make money, but still failing to understand how to manage it.

At the same time, many advisors still view the cryptocurrency investment space as “The Wild West” – casting themselves out of the expert pool. This mindset may be pre-imposed by popular industry opinion, but the reality is Gen Z investors need help managing the wealth they’re starting to build – and they need it now.

The lifetime value of each potential customer gained from this generation may also prove to be longer compared with current clients given that the eldest members of Gen Z are just 24 years old.

Here are five ways advisors can build their Gen Z client base.

1. Focus on low contributions

Many advisors require prospective clients to have a minimum, usually high, level of investible assets. That has narrowed the investment tunnel for Gen Z, leading them directly to the crypto market, which offers flexibly low contributions.

By the time they can afford to use wealth management services, they may choose not to because either they have grown comfortable investing without advice or not investing in traditional asset classes. That’s why advisors need to consider accepting lower levels of investible assets to attract younger investors.

Fortunately, innovative firms exist and offer opportunities to create novice funds and investment vehicles to fill gaps that exist in the marketplace.

2. Attract the female cohort

Despite headlines attributing crypto’s popularity to younger generations, not all of them are ready to jump into the space just yet.

Recent data reveals a gender divide within the group, skewing those in need of financial services in the future more likely to be female.

According to data from market research firm YPulse, half of men within Gen Z are more likely to invest in cryptocurrencies. That compares to 38 per cent of women who are interested in this space.

Both women and older investors are more likely to stay out of the crypto frenzy. That suggests women could be compelling new clients for wealth advisors.

3. Consider expanding your services

Advisors should consider expanding their offerings to this generation, whether through the addition of new services or specialized team members who focus solely on this clientele.

For example, retirement-focused practices that currently serve clients with have children who are part of Gen Z may want to consider expanding their products to keep the younger generation with the firm.

With a lukewarm prospect base already at arm’s length, not only may this move benefit in the short term, but it may also boost your practice’s value when it comes time to sell.

4. Boost your online presence among Gen Z

The pandemic has resulted in online financial education content becoming a popular marketing tool among wealth advisors, who have increased their use of YouTube and other social media platforms.

Advisors looking to talk to Gen Z and attract them as an audience must be where they are and speak how they speak.

Use social media platforms that this group love and tailor your message to get their attention.

5. Build trust

Trust is a key factor for this cohort just as it is for any other demographic. Demonstrate explicitly why they should trust you. A key way to show that is through emphasizing points of alignment between what you offer and what they believe in.

For example, if you provide access to sustainable funds, be sure to communicate that. Similarly, if you can provide exposure to crypto ETFs or if you’re an expert in the cryptocurrency space and have the skill set needed to guide those who have new-found wealth, be clear as to how you can help.

Mark Pinto is president of Harbourfront Wealth Management Inc. in Toronto.

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