How Demographic Changes Are Shaping Financial Planning
Written by
Laura Bogart
Edited by
Amber Barkley
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Many people may think of financial planning as a resource belonging only to wealthier, more established people — in other words, older generations. However, financial planners and advisors open their doors to people with all kinds of needs and backgrounds, and they’re finding more people of different generations sitting in front of them.
As unique demographics seek advice, financial planners are seeing changes in the kinds of questions they’re fielding, which has, in turn, driven new trends in their industry. GOBankingRates caught up with Kerry Keihn, partner and financial advisor at Earth Equity Advisors, and Mark Charnet, founder and CEO of American Prosperity Group to learn more about these shifts.
Gen Z and Millennials Focus On Charitable Giving Earlier
While older generations tend to focus on giving to causes that ignite their hearts later in life, many millennial and Gen Z investors are lighting the match much earlier. According to Keihn, these younger generations are prioritizing charitable giving earlier in life and integrating it as as a core goal of their financial plans.
“They often seek advisors who understand the importance of aligning their financial strategies with personal values and long-term philanthropic goals,” she said.
Keihn added that advisors are challenged to help their philanthropically-minded clients balance their charitable giving along with other financial priorities like home ownership, debt repayment and retirement.
Younger Clients Are Looking to Sustainable Investing
In addition to charitable giving, Keihn said that many millennial and Gen Z clients are looking for their investment portfolios to reflect their values. She’s seen a rise in younger clients prioritizing sustainable investments.
“They want portfolios that both grow and contribute to the greater good,” she added.
Investment Best Practices Remain the Same
When it comes to certain best practices among the generations, Charnet said, “The more things change, the more they stay the same.”
He was quick to say that newer investment preferences among younger people can be good, but the concepts around systematic investing are beneficial to all generations — and he encourages millennial and Gen Z clients to look into it, as well.
He shared that, for the clients he works with, he’s seen some shifts in the kinds of industries generations want to invest in — notably, an increase in fintech — but the basic routines of systematic investing remain the same. For instance, people need to invest a weekly amount in the funds or companies of their choice.
“For diversification, I recommend they use mutual funds. They should invest the same dollar amount every week via their check into the funds,” he said. “This way, they develop the habit of systematic investing and the frequency of share purchases. If a situation comes up, they can reduce or eliminate the contributions as need be.”
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