FIRE IN THE BELLY – Winnipeg Free Press



Graeson White may not be the poster boy for generation Z when it comes to money management.

Rather, the 22-year-old student at the University of Manitoba’s Asper School of Business is a model of sound financial decisions, for any generation.

“I don’t have a set amount to invest every month,” says White, who works part-time for a payroll company in the city. “I just put away as much as I can.”

His approach to building wealth is founded on an old-school principle: Save early and let compounding returns do the rest.

Though hardly the typical adult under 26, White’s approach to finances does reflect many attitudes of generation Z.

The successors of millennials as the next crop of young adults, which marketers and media herald as drivers of cultural change, are indeed doing things differently, a recent survey has found.

According to BMO’s annual investment survey, more than six in 10 of adults ages 18 to 25 review their financial goals every three months — the highest rate among all age groups.

By comparison 54 per cent of millennials (ages 26 to 41) and 36 per cent of baby boomers (ages 58 to 67) did the same.

“Gen Z are tracking their financial goals more than any other generation,” says Caroline Dabu, head of wealth distribution and advisory services at BMO Private Wealth.

One reason is this age group is entering adulthood amid challenging times.

“This is a generation (coming of age) in the middle of rising inflation, increasing interest costs… facing difficulties getting into the real estate market.”

Yet today’s young adults are also doing things a lot differently in large part because of their comfort with the digital world.

One third of generation Z, for example, make investment decisions based on social media influencers, the survey revealed.

That’s compared with about one in five among millennials and less than one in 10 boomers. (If you’re wondering about generation X — BMO did not provide much data on this smaller demographic between ages 42 to 54 in supporting press material.)

Yet gen Zs are also more apt to rely on financial advisors, based on a recommendation from friends or family, with almost one in two indicating they had met with one under these circumstances.

“This generation is hungry for information about building wealth,” Dabu adds.

Winnipeg investment advisor Josh Olfert, 26, can attest to that.

Arguably a gen Z himself, he started investing in his teens and launched his own financial planning and investment company at age 21.

“There are a few major shifts in my view of working with this age group,” says Olfert, a certified financial planner with Haven Wealth Management.

“It’s the difference of being introduced to social media and related technology when you were already mature versus being born into it.”

While generation X grew up in the computer age, and millennials with the ascent of the internet, generation Z has grown up immersed in social media.

“It’s very different when you’re in the algorithm — as they say — and still developing as a kid,” Olfert says about computer programming processes underpinning social media technology that determines what content users see.

In the early days of Facebook, adult users largely saw information to people they knew. While still somewhat the case today, the marketing machine behind social media uses algorithms to generate new content tailored to what an individual might find interesting.

“Now with Instagram Stories or TikTok, you are pushed content that is engaging to your demographic, and what is more engaging than some 18-year-old who just bought a Lamborghini because he put all his money in Bitcoin from his summer job and is now a millionaire?” Olfert says.

“You get these high-engagement stories about young people achieving wealth no generation has before, and that’s pushed through algorithms to all these kids in high school.”

Seeing these stories, young adults are bound to be curious about cryptocurrency instead of the stock market.

Or if they’re interested in stocks, it’s often meme stocks on Reddit feeds like wallstreetbets, Olfert says.

“(Wallstreetbets) is essentially gen Zs rallying together and placing trades to take down Wall Street,” he says about the movement to push up share prices for AMC and GameStop to upend hedge funds’ bets against these companies.

Yet it’s more than that, Olfert adds.

“They start thinking, ‘Wait a second, my parents, it may be possible for me to become unlike financially successful early without becoming a doctor or a lawyer?’” Olfert says. “It’s, ‘Maybe I can start an online business?”

Becoming a digital entrepreneur, using social media or developing new apps has its advantages when it comes to creating significant wealth quickly, he adds.

“There is this business idea of ​​’zero marginal cost of replication.'”

Create a useful app, and that software could potentially get downloaded millions if not billions of times.

“When you have kids seeing these digital business models and how quickly they can grow, the eight per cent you can earn (annually) owning a basket of stocks isn’t necessarily exciting,” Olfert says.

Still, there is growing recognition among gen Z about the aforementioned power of compounding returns to retire early, Dabu says.

“More (gen Zs) subscribe to the FIRE movement — financial independence, retire early,” she adds.

White — who invests in exchange-traded funds — agrees with that mantra, at least in part.

“I don’t really think about retiring early, though, because I like working,” he says. “But I don’t want to work all the time because I need to.”

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