New research shows a stark generational divide in financial confidence, investment knowledge, and preparedness for inheritance. As Baby Boomers are poised to pass down an estimated $84 trillion to younger generations by 2045, the data suggests younger generations aren’t equipped to handle it just yet.
That’s according to a new study by Seismic, the provider of an AI-powered platform that prepares customer-facing teams with the skills, content, tools, and insights needed to maximize every buyer interaction and strengthen client relationships.
Based on a survey of 1,000 U.S. adults, the Seismic survey showed that two-thirds of Gen Z adults are not confident in their understanding of personal finance. Gen Z is expected to be the largest and wealthiest generation in the next decade, but their low financial confidence may lead to a lack of preparedness for managing inherited wealth, creating an environment for overspending, poor investment decisions, and long-term financial instability.
“The Great Wealth Transfer is already underway and represents a pivotal opportunity for financial advisors to build trust with the next generation of clients,” said Kerry Ryan, CPWA®, Senior Director, Financial Services Industry Strategy & Marketing, Seismic. “As this shift accelerates, capitalizing on it requires more than business as usual. Advisors must recognize gaps in financial literacy and preparedness, and meet younger investors with education, empathy, and a fresh approach. With stronger financial confidence, both those passing down wealth and those inheriting it can work toward long-term security and stability.”
Seismic’s research uncovers core themes around Gen Z’s lack of preparedness for receiving an inheritance as part of the Great Wealth Transfer. Key findings include:
- Gen Z are more likely to trust informal sources for financial learning and less likely to turn to professionals for guidance – While more than half of Baby Boomers (56%) turn to financial advisors for guidance, a significant portion of Gen Z (61%) say they are more likely to rely on family and friends.
- Informal learning paths may contribute to gaps in financial preparedness and potential mismanagement of inherited wealth – Only 35% of Gen Z has worked with a financial advisor and just 29% have a detailed plan for managing or passing down inheritance.
- Boomers and Gen Z agree, young generations are not ready – Of the generations set to pass down their wealth, more than 2 in 5 Baby Boomers (42%) and Gen X (45%) do not believe that younger generations are at all prepared to handle inherited wealth responsibly, aligning to how Gen Z views themselves with only 26% feeling well-prepared for any major financial changes.
Wealth managers and financial advisors must act now to prepare for the incoming generation of clients, as the digital-native younger generations set to benefit from the Great Wealth Transfer have different expectations than the mature clientele many financial services firms currently serve. With many digital-first challengers entering the market, legacy firms must evolve how they educate, communicate, and build trust with younger clients. Key strategies to improve the readiness of firms and advisors include:
- Upskilling client-facing teams with AI-powered tools
- Investing in modern client-facing and advisor-facing technology
- Producing relevant, personalized content that resonates with younger investors
- Meeting younger clients where they are, including on social media platforms, with timely and compliant financial education
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