Millennials and Gen Z are skeptical when it comes to traditional financial advice and metrics of success. But one financial executive says it should help them in the long run.
Despite the economic headwinds facing today's young people, David Nason, TIAA's senior executive vice president and chief operating officer, doesn't necessarily believe in the financial future of Millennials and Gen Z. He gave two reasons not to worry. luckThursday's Future of Finance Conference.
“One, they have time. And time is your best friend when it comes to this kind of thing,” Nason said. “And secondly, I like the fact that they are skeptical but also push back. I like the fact that they understand what it's like to recover from a risk.”
While COVID-19 was a tough time for many workers, Nason points out that economic conditions for young people have improved dramatically since then. In fact, a recent study by the New York Fed found that the inflation-adjusted wealth of Americans under 40 increased by an astonishing 80% between the first quarter of 2019 and the third quarter of 2023. It was found that the increase in wealth was significantly higher than that of the previous generation.
Not only that, Gen Z workers are earning healthy salaries and entering the housing market faster. And, broadly speaking, they are saving for retirement faster than older generations. This healthy baseline speaks volumes about young people's potential to achieve their financial goals.
“I strongly believe that this … population is going to do well,” Nason said.
Still, there are many ways to improve. Fellow panelists Tom Davidson, founder and CEO of EVERFI at Blackbaud, and Vanessa Okriwe, principal at Edward Jones, said that both employers and parents can help young people understand their finances. He pointed out that they play an important role in making this happen.
On the employer side, Nason said offering automatic enrollment and automatic escalation of retirement savings, for example, is one of the best ways to support the financial health of employees.
It's also important to meet people where they are, Okukuraiwe said. For younger generations, this means providing digital-first advice and products to help them manage their finances. You could also consider offering advice sessions in Spanish to reach more employees.
But panelists agreed that parents play an even more important role because they spend so much time with their children long before they start their first job. That's something Millennials and Gen Z should remember with their children.
“The importance of parents and guardians cannot be underestimated when it comes to immersion,” Okukuraiwe said. “Children learn their first language at home. Financial education should be treated as a language.”
