According to the US Bureau of Labor Statistics, Gen Z is projected to constitute a significant 30% of the country’s workforce by 2030. This means that they are likely to redefine the landscape of the retirement planning community. Moreover, the substantial purchasing power of Gen Z, estimated to be $143 billion according to Business Insider, is a crucial indicator of their potential to influence industries and markets.
This would mean that the retirement plan industry will need to adapt offerings to cater to the preferences of these digital natives. What does Gen Z want and value? Predominantly experiences, sustainability, and personalized solutions. Here’s how you can meet their needs.
“If it can’t be done on the phone, it doesn’t happen,” said Jason Lenardson from Lincoln Financial Group at the same webinar organized by Congruent. “If you don’t have those things (omnichannel tools, especially on the phone), you’re not going to get someone like my (college-going) daughter to engage.”
Reports show that 99% of Gen Zers own a smartphone, and 98% use their smartphones to connect to the internet most of the time. And 64% of Gen Z smartphone users (64%) say they are constantly connected online. So, if your retirement solutions are not online and on their smartphones, you’ve lost them completely.
According to a McKinsey & Company report, 58% of Gen-Z is willing to pay more for products targeted to their individual personalities, says a McKinsey & Company report. There are several ways to personalize content. For example, use surveys to gather data on their usage, wants, and needs.
Gen Z loves to be asked what they want. Another survey shows that 68% of 18 to 24-year-olds expect brands to contribute to society. Show them what you do and let them in.
“From my perspective, I think Gen Z, which is the pre-retirement (cohort), is the most apprehensive. I think the young professionals or the youngest group is more comfortable sharing data,” said Claudia Step from Oculus Partners at the same webinar.
This means that as a retirement planner, you’ve got to be transparent to gain their trust. “New age fintech apps gave us a customer-centric and transparent experience, and they set the bar high. A study by Bain said that people trust tech companies much more than they trust their banks. I think we’re all playing catch up,” said Sagar Shankaranarayanan from Congruent Solutions. Establishing two-way communication and being timely and responsive to customers are ways to establish trust.
“In just a couple of years, we’ll have the Gen Z coming in, and we’ll have to nail that CX, make it transparent, and be customer-centric, or we’re going to lose much of that business from the entire group,” said Sagar.
To create a great customer experience, use videos, discounts, and rewards programs (65% of Gen Z sees value in this, says IBM Institute for Business Value), design for the platform (the website has to adapt to the device used), and account for accessibility.
Gen Z sees themselves as unconventional thinkers, risk takers, and hands-on financial investors, say financial managers. And that is the approach they are likely to take for retirement planning. They see it as part of their whole financial journey. Remember, their careers are marked by change. Retirement plans need to be just as flexible and ‘portable,’ so to speak.
Retirement plans must be designed to be easily transferred and continued even if they switch jobs or career paths to resonate with them. They are more actively involved in money management than their parents and grandparents and want real-time solutions. So, when talking retirement planning to Gen Z, one needs to talk about buying a house, children’s education, retirement, contingency planning, healthcare expenses, etc. One needs to give Gen Z a balanced, diversified and holistic approach to retirement planning.
For more information on retirement planning, do get in touch with us at Congruent.