phone apps

Representing the largest generation in American history, the Baby Boomers’ exit from the workforce could leave big shoes to fill for young Generation Z.

According to a report by Morningstar Research, “How the Next Generation of Investors Approaches Retirement, Savings and More,” while Gen Z has been profiled by several researchers, we still know surprisingly little about the generations financial habits. In fact, while some past reports have found this generation to be financially savvy, owing to being technology-oriented, Morningstar Research found Generation Z to be similar to Generation X and Millennials in its difficulty to understand personal finance.

Further findings showed this generation values the importance of education and felt that educational institutions should offer financial classes to students.

“We need to be very careful in generalizing this population of young adults. This is the most diverse generation in U.S. history; and they show a wide variety in preferences and attitudes,” said Stan Treger, senior behavioral scientist at Morningstar Inc. “Our research serves to provide advisers and other professions with an initial stepping stone to tailor financial advice for the next generation of investors. Advisers can rest easy knowing that Generation Z is interested in finance and wants to learn about it. The independent and entrepreneurial spirit they possess may drive them toward investing, and I would not be surprised if the number of investors increases as finance apps gain popularity.”

Still, although so many Americans are experiencing times of financial hardship amid crisis, research showed that young adults are staying positive. In its survey, the company found nearly 60 percent of Gen Z respondents to self-report happiness and optimism. And saw two-thirds of unemployed young adults are optimistic about finding a job. Eighty-five percent of employed respondents said they were confident they will hold the job they already have.

“Every generation has lived through a historic moment of time, and this will certainly be a formative one for Generation Z,” Treger said. “We may be tempted to think that today’s bleak times beget bleak attitudes, but surprisingly, we found the opposite. We are seeing that even despite the COVID-19 epidemic, young adults seem to be in good spirits. Despite hardships that they or people whom they know are facing, about 81 percent of our participants reported being happy and being optimistic about their future.”

While the research found this generation is eager to work and stay active retirement is on their minds. Notably, the company’s research found that Generation Z had much greater optimism about retiring before or at age 65 compared to older generations. Treger tells WWD, this generation is redefining what retirement means. In fact, this generation places retirement at high importance and listed it as one of the top five most important benefits that an employer could offer.

“They may be the chattiest generation yet, as half of our participants reported to have talked to their parents about retirement in the past,” Treger said. “I was surprised to see that over half of our participants preferred opt-in enrollment workplace retirement plans over the effect of auto-enrollment plans. My speculation is that their drive toward autonomy turns them away from plans that make choices for them. Rather, they may prefer to decide to enroll in benefits themselves. What we may see as they progress through their career is a potential disconnect between mental concept and actual practice. Perhaps they may not see the advantages of auto-enrollment while they are not in their career field but will see its advantages in time.”

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