Just because younger clients prefer experiences over things, doesn't mean their long-term goals are any different, argue two gen Z advisors
The long-held trope about millennial and gen Z consumers is that they tend to prefer spending on experiences over things. Concerts, great restaurants, music festivals, and vacations tend to be higher up on the list of priorities over cars, consoles, devices or even homes. Market surveys of younger consumers from around the world have tended to back up this trope. On the surface, that shift in preference might appear contrary to the principles of wealth management. A discipline that focuses on buying and holding assets for the long-term may not seem to mesh with a worldview that prioritizes spending on something inherently fleeting. Two advisors specializing in younger clients, however, argue that a preference for experience and long-term saving does not have to be mutually exclusive.
Tara Lalehparvar and Curtis Holt-Robinson are the co-founders of Skyward Financial, a Vancouver-based advisory practice specializing in serving younger clients. Speaking to WP from a bench outside the Belvedere Palace in Vienna, enjoying some of their own experiential spending, Lalehparvar and Holt-Robinson explained how a preference for experience can fit within a long-term financial plan, even if a client doesn’t want to pursue traditional wealth building avenues like home ownership. They stressed that as advisors try to bring younger clients on board with long-term wealth building, they should fully understand why those clients want to spend on experiences in the first place.
“The fact that experiences are a valid thing to spend money on and save up for has been more and more so recognized in the younger generation, as opposed to more physical and larger fixed assets like homes and vehicles, because those things have become so unaffordable,” Lalehparvar says. “Younger people’s hopes and goals have been placed into a different box that we can kind of label as experiences and traveling. I’ve noticed that a lot of clients who are in their early to mid 30s have the objective to retire earlier, or at least be in a financial position to work less, in order to be able to open up time to spend money on experiences.”
Lalehparvar and Holt-Robinson explain that the preference for experiences — and the time and money required for those experiences — has many clients wanting to get off the “hamster wheel” of full-time work faster. In pursuing that goal, they are becoming dedicated and optimistic savers and investors. Holt-Robinson notes that for many younger clients, there are daily expenditures on small things that can get in the way of those goals. Refocusing those clients on the bigger experiences they want to have in both retirement or in a less intense working life can help them improve overall habits.
Social media plays a role in how these young people are prioritizing experiences, as well. Both Lalehparvar and Holt-Robinson note that trips and experiences like a music festival are frequently sold to younger consumers via social media apps. However, they welcome the fact that greater digital connection and easy access to information has encouraged people to go out and experience the world for themselves, rather than through their phones.
None of those priorities, the Skyward team explain, run contrary to the major financial goals and milestones that advisors work with clients to achieve. In fact, they argue that having these experiences can be incorporated into those milestones. While shifting relationships with work, the desire to strike more of a work-life balance, and a different view of assets like houses might result in different aspects of the financial plan, the fundamental goal of financial freedom remains firmly in place.
There is an element of experiential spending that can be motivated by hopelessness, the sense that asset ownership is unaffordable, so we might as well spend on vacations. Holt-Robinson and Lalehparvar note, though, that through the financial planning process even the most hopeless young person can begin to understand that there are avenues to financial freedom. They can shift towards a more optimistic form of thinking that still prioritizes experience.
As advisors engage with the next generation of clients, be they up and coming professionals or the inheritors of family wealth, Lalehparvar and Holt-Robinson believe that tropes and stereotypes about young people as frivolous experiential spenders are unhelpful. Instead, they believe advisors need to meet their clients ‘where they are’ and understand why they want to spend on experiences now and achieve financial freedom later.
“Become curious about your client,” Holt-Robinson says. “Really do that. It sounds nice to say it, but I think where the faults and issues in an advisor-client relationship come from, is the is the advisor more often than not having a preset idea of how they’re going to handle this client. I think maybe even having one session in the planning process, that is the session that's called ‘about you,’ and really to just ask questions, really to get excited about getting to meet your client as they are. I think if you ask questions that are genuinely focused on getting to know them, clients will say the most incredible things about their value system and about, you know, their history and about where they want to go in the future and what's important to them now.”
