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Are financial services ready for Gen-Z?

Zoomers are said to be fuelling disruption in financial services and flipping the switch on how things are done. An emerging battleground for growth, they'll soon make up 40% of the population and are pipped to become the wealthiest generation. So are financial services ready for them?

For years, financial advisers and planners have been nice and comfy doing business with Gen-Z’s parents and grandparents. Capturing the interest, affection and finances of the younger generations is going to take a different tack - but what?

To find out, we invited chartered financial planner and content creator Martin Bamford, onto the Upfront podcast to talk about this generation and what financial services businesses can do to take them on (and what happens if they don’t).

Here’s some of what he had to say. You’ll want to listen to this episode in full.

Let's cut to the chase, Martin. Are financial services ready for Gen Z?

Martin: Let me give you the blunt answer - no, I really don't think they are. Sadly, particularly here in the UK, retail financial services are the preserve mostly of older, white men who don't really get Gen Z and who don't really get social media and the way the world is changing. There are some signs of improvement, there is more diversity and more younger financial planners out there, but in the main, I'm really sorry to say no, I don't think we are.

A lack of understanding is going to be the biggest hurdle for many in retail financial services

Why do you think Gen-Z will be a challenge for financial services businesses?

Martin The biggest challenge will be understanding what drives them and what motivates them and communicating with them effectively. This is a different generation with different values, different behaviours and different emotions. I think a lack of understanding is going to be the biggest hurdle for many in retail financial services.

So what advice do you have to help advisers get down with Gen-Z?

Martin: You have to embrace it. You have to experiment. You have to absorb everything that's going on out there. Really immerse yourself in that market and in that segment to get a better understanding. I think that's the best hope that people in retail financial services have got.

And what’s the risk to financial services businesses if they don’t connect with younger generations?

Martin: The biggest risk is extinction. We've got a funny situation at the moment where for the past decade or longer, most people in retail financial services have had it good because we've been dealing with the post-war retiring baby boomer population who are in the main quite wealthy. They've accumulated lots of assets over their working lives, and they've got complex needs. It's a perfect storm for financial advisers and financial planners. They come to us because they've got these complex needs and need complex advice, and they're wealthy enough to pay for it. So it's been fantastic. But that time is sadly coming to an end. Now we’ve got to look down the generations and think, where are the next opportunities? Where are the next client segments? And we've got to start looking now.

The biggest risk is extinction

The obvious way to engage with the younger generation is through social media. It’s something many financial advisers and planners have struggled to get right; why?

Martin The biggest challenge is time. I've never met a financial planner that doesn't have a packed diary and things to be constantly doing, so carving out that time to research, create and share content is a significant challenge. Many financial planners I speak to just don't see value in it. I think they are still very comfortable in a world where they're dealing with mostly retired clients who come to them via referral. So this isn't necessarily about the pressure on them today and right now, but what might happen five years down the line when that client bank and referrals start drying up, as they inevitably will.

What advice do you have to help them get started on social media?

You can only get better by practising and by doing your first episode, your first video or your first blog. They’re going to be terrible, and that's fine

Martin Start by picking one form of content creation (like podcasting or video) and get comfortable with it. I cringe now when I listen to some of my earlier episodes - I sounded like a bit of a moron. It's hard, but you can only get better by practising and by doing your first episode, your first video or your first blog. They’re going to be terrible, and that's fine because unless you do the first one, you can't do the second one. You've got to start somewhere. Over time, the more you do it, the easier it gets. I can quite happily now do a podcast episode, video or blog without getting nervous and without thinking too much about it because I've done so many of them now. But to get here, I had to start.

How to be a financial services business that gets Gen-Z

There aren't many examples of larger financial services groups doing TikTok, but the ones that do tend to miss the point

I'd love to see more of the good out there, people doing it for the right reasons to genuinely educate, inform an audience, to help people make better financial decisions.

What are your thoughts on traditional financial institutions and the industry's regulators getting on TikTok?

Martin Oh, so the Financial Conduct Authority here in the UK has got into TikTok, and they've shared a few adverts that completely miss the mark. They're obviously trying to appeal to that younger gen-z audience, but it's really poorly executed, I'm sorry to say that.

I'm sure they've spent a lot of money with a very flashy London marketing agency to come up with them, but the fact they're having to pay TikTok to present that video to lots of people on the platform says that it misses the mark. If they did a good job of it in the first place, it could go viral fabulously. There aren't many examples of larger financial services groups doing TikTok, but the ones that do tend to miss the point, and it just doesn't work.

What’s your take on so-called ‘finfluencers’? Are they filling a gap that isn't being served by the profession?

Martin The retail distribution review wiped out a huge amount of distribution in the UK and reduced the capacity to get financial advice. There are nowhere near enough financial advisers and financial planners in the UK. I’m really uncomfortable with the term ‘finfluencers’, but they’ve come along to fill a bit of the gap in the market, which is good because people need quality financial education, need to understand how the financial services system works, how money works and how to make the best decisions about their money. There is all sorts of good behind this. What I don't like is the execution of it and the motivation behind it in some cases. So I've seen so many examples of influencers sharing content who have no qualifications and no experience in that market That's, quite frankly, dangerous. And in many cases, their incentive for doing it isn't to educate or inform but to make money. So it's good and bad. I'd love to see more of the good out there, people doing it for the right reasons to genuinely educate, inform an audience, to help people make better financial decisions. But I'd say sadly, at the moment, the majority are probably doing it for the wrong reason.

What a wonderful opportunity for financial planners to embrace social media, to embrace content marketing, but to do it to be genuinely helpful to society

Do you think the UK regulator should follow the Australian regulator by banning influencers?

Martin Australia weirdly is often ahead of the curve when it comes to financial services regulation. I remember when I entered the profession in 2001, we heard from lots of Australian speakers about how to make things better and we have followed that example. Here in the UK, influencers are an unregulated sector. They've got some standards they have to follow via the Advertising Standards Authority, but that's really about disclosure to make sure people know it's an advert and that isn't particularly well adhered to in the main. I think in Australia now, you can be slammed in prison for up to five years if you give unlicensed financial advice. So yeah, we need to give really clear guidance on how to do it well. And those that aren’t, throw the book at them.

Is there an opportunity for more financial advisers and planners to use social media to help educate others?

Martin Absolutely. I think because of our position in the profession and our experience and knowledge, we have a duty to warn people about scams and the things that can go badly wrong. Because, you know, when money-related things go wrong, they don't tend to go wrong slightly. It tends to be a loss of life savings or getting substantially into debt for the wrong reasons. So yeah, what a wonderful opportunity for financial planners to embrace social media, to embrace content marketing, but to do it to be genuinely helpful to society and counterbalance some of the terrible, misinformed content that’s out there.

You can be the best financial planner on TikTok but it’s not going to work if you still have paper-based systems and you're only available for meetings face to face between 9 to 5 Monday to Friday.

Is a successful TikTok channel enough to engage the future generation?

Martin Of course it isn’t. You can be the best financial planner on TikTok, but it’s not going to work if you still have paper-based systems and you're only available for meetings face to face between 9 to 5 Monday to Friday. You've got to do a complete and probably quite radical overhaul of your business to make it appeal to the new way of doing things. The pandemic's done a lot of the heavy lifting for us in a way. Many businesses have seen the light because they had to. Before, it was a very, very traditional profession - all about being office-based and mostly about the suit and tie. The pandemic's broken a lot of bad habits and probably accelerated our profession by a decade.

The pandemic's broken a lot of bad habits and probably accelerated our profession by a decade.

What social media apps are on your phone?

Martin My phone is just packed full of apps. My oldest daughter made me delete TikTok this week cause we're away on holiday, so I'm feeling a little bit healthier, I think. Hopefully, within a couple of weeks of being away and not having that on my phone, I’ll break that habit a little bit, and I won't be going back to it. Other than that, I use Twitter an awful lot to stay informed on what's going on, not just in the world but within financial services. There are some fantastic trade journalists on there who share analyses of what's happening. So yeah, Twitter's probably my go-to app on the phone.

Do you love or hate change?

Martin You've got to be able to embrace change. Within financial services, we've had a fair bit of practice doing that because regulations, tax rules and accepted practices change all the time. Being able to embrace change, not resist it and not fear it is really important.

My thesis is that change will become bigger and more regular in the future, and we'll see more upheaval in society than we have historically, just because of how the population is growing and the way the planet is changing and evolving. So get comfortable with it. It's only our reactions to change that make it bad or a good thing, not the change itself.

Change will become bigger and more regular in the future so get comfortable with it

Ok, Zoomer

Listen to Martin's episode of Upfront here or wherever you get your podcasts.

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