Gen Z most likely to seek advice following inheritance: Fidelity

According to Fidelity International’s Next Generation report, there are clear differences across generations when it comes to their priorities after receiving an inheritance – as well as their likelihood of seeking professional financial advice.

Generation Z often gets a bad rap as getting all of their financial information from TikTok finfluencers with dubious to non-existent qualifications and experience, yet they are the cohort with the greatest appetite for advice.

Speaking at a media briefing in Sydney on Thursday, Fidelity International’s head of wholesale, Australia, Lauren Jackson, explained that Gen Z – which for the purposes of the research ranged from 18 to 28 – are “much more open to seeking advice earlier”.

“You can get information from anywhere, really, it's about then deciphering how you use that for your own financial situation,” Jackson said.

“The appeal of advice was something that we thought we'd have a look at a little bit more, because it did suggest that one in two Gen Z's open to seeking advice, and that is a great kind of statistic.”

In comparison, this drops to two in five for Gen Y and to just three in 10 for Gen X.

“I think the statistics are now around less than 15 per cent of Australians are seeking advice, but if you've got 50 per cent of Gen Zs that are much more likely to seek advice, that is a great opportunity if you're in the advice community right now,” Jackson added.

It becomes even more impactful when considering the scale of the wealth transfer expected over the next 20 years, with the well-covered $3.5 trillion opening the door for advisers to assist clients and their families manage the flow through of assets.

Fidelity’s research surveyed over 1,000 Australian consumers aged 18 to 59 years old to understand their evolving financial needs and behaviours.

It found that close to one in five of those surveyed have already received some form of inheritance and one in 10 expect to receive even more. A further two in five believe it is likely that they will receive an inheritance in the future.

“Much of the commentary has been focused on the positives of an inheritance and how this could help younger Australians with issues such as housing affordability. However, it is clear that there are also some concerns. The vast majority of next gens say they are worried about managing their inheritance,” Jackson said.

“Over half of next gens say they are likely to change their investment strategy after receiving an inheritance, and two-thirds would consider seeking financial advice or planning to help with this. There is no doubt that getting professional financial advice could be very useful for these people to help manage the tax implications, legal issues, and investment decisions.”

Across all generations, the most common uses for an inheritance was investing it (40 per cent), followed by paying off debts (39 per cent) or buying a home (31 per cent).

Broken into the generational cohorts, Gen Z are notably even more likely to plan to invest their windfall (48 per cent) than Gen X (41 per cent) or Millennials (35 per cent).

Given that Gen Z is more likely to want to invest their inheritance than other generations, Jackson explained that financial education is more important than ever.

“If they're planning on buying a home in the future, things like cash flow, budgeting tools, education is going to be really important. Again, that creates a great opportunity for the advice community,” she said.

“I think the other important thing to acknowledge around that is we will obviously have to talk to that generation about understanding things like investment time horizons and how to think about building safe or resilient financial plans in the future.”

Another complicating factor, she added, is how strong investment markets have been over the last 15 years, meaning Gen Z have only ever experienced this environment since being old enough to understand financial issues.

“As we step through this next decade and beyond, maybe that roller coaster starts to become a little bit more volatile, and the easiness or the quick wins of the last 10-15 years of investing may not be as easy to come by. So, I think it is essential that education becomes a really important part of working with that that cohort of investors,” Jackson said.