Gen Z: Inheritance and investments

Sandwiched between Millennials and Generation Alpha, Generation Z (Gen Z or ‘Zoomers’) are the first demographic cohort to have come of age with technology at their fingertips from an early age.

These ‘Digital Natives’, born between 1997 and 2012, are expected to make up 30% of the global workforce by 2030, according to the World Economic Forum – so it’s vital that, as advisers, we understand the legal and cultural factors informing their decision making so we can support them in the years to come.

To help us do this, we partnered with Opinium to commission an independent survey of 2,000 Gen Z adults (aged 18-27 years) and 2,000 of the (non-Gen Z) general population to unpack their generational perspectives on wealth management and life’s major milestones including marriage/civil partnership, having children, home ownership and travel. 

This article is the third article in the series, which forms part of a longer report on wealth management and life planning for Gen Z. This article focuses on inheritance and investments.

In the 21st century, the opportunities available to us are increasingly shaped by access to financial support from parents, rather than solely by personal achievements or education. This trend has its origins in the economic shifts of the 1980s, but gained momentum following the 2008 financial crisis, when private wealth surged while wage growth stagnated. As we move into the 2020s, the landscape has shifted from a meritocracy – where effort and skill lead to success – to an inheritocracy, where family wealth plays a pivotal role.

The new inheritocracy

Against this backdrop, Gen Z are actively talking about inheritance, our findings suggest. For example, four in five Gen Z adults (81%) have had a conversation about what they might inherit in the future or the inheritance they’re planning to leave, whereas adults older than Gen Z are less likely to have talked about their inheritance (68%).

When it comes to leaving their own inheritance, over half of Gen Z adults (54%) would leave it to their children – regardless of whether or not they have had them yet. It’s useful to have these kinds of difficult conversations about wills and inheritance sooner rather than later to ensure that all parties are prepared for unexpected events. Older generations have traditionally been somewhat reluctant to discuss these topics, but this has now changed.

A generation of responsible investors?

A focus on building wealth is clear among Generation Z, according to our research. Nearly a quarter of Gen Z adults surveyed (23%) say they go to financial advisers or professionals for investment advice or information. Just 6% of Gen Z say they don’t seek advice for financial decisions at all – versus over a quarter of Millennials (26%). 

Our findings also suggest that Gen Z adults want to invest sustainably but prioritise financial outcomes. For example, 35% want their money to make a positive impact, but only if it results in their expected financial outcomes. Another quarter (28%) primarily want their money to deliver expected outcomes but would be happy if it made a positive impact on the world. Less than one in 10 (7%) don’t focus on the impact of their finances beyond their financial outcomes.

Our survey showed that 43% of Gen Z respondents would invest in sustainable investments even if the returns were lower than non-sustainable investments. However, 51% would only invest in sustainable investments if the returns were the same or higher than non-sustainable investments. A small minority (7%) would not consider sustainable investments at all.

Gen Z and charitable behaviours

Charitable donations are seen as important among Gen Z – but an intention-action gap persists. Seven in 10 Gen Z adults (71%) believe it’s important to donate to charity – and a similar proportion (68%) would like to donate to charity more than they already do. This compares to 61% of older UK adults, with 42% saying they would like to donate more than they do.

Six in 10 Gen Z adults (59%) say they can’t afford to make regular charity donations, and just under two fifths (38%) say they factor such donations into their monthly budget.

Over half (54%) would rather save for their future than donate to charity, and seven in 10 (71%) claim they would donate to charity more if it went directly to the cause.

Understanding the values and unique perspectives of Gen Z is crucial to building stronger relationships with current and future clients and remaining relevant in the fast-changing financial landscape. To read the report in its entirety.