As we all live through what feels like one huge social experiment, Gen-Z is adapting incredibly well.
Generations are often shaped by world events that take place in late adolescence. With households working, learning and living together 24/7, the first few months of 2020 have proven to be one of the biggest social experiments in recent times.
Dr. Eliza Filby, an intergenerational expert, looks at how people’s values and behaviours are changing and the implications for politics, work, consumption, society and economics. She differentiates between what is age-related and what is generation-specific. Filby has worked with many wealth organisations to help understand the challenges between generations in regards to wealth and succession planning.
“We’ve been wrestling with the challenges of dealing with a new generation of clients, be it Millennials or Generation Z, for the last few years,” says Annabel Bosman, head of Relationship Management at RBC Wealth Management in London. “And this conversation has been at the forefront of our client’s minds. They want to know how they can manage succession planning when those generations think and communicate differently.”
Filby shares her insights on younger generations and their outlook, response, and challenges in 2020 and beyond.
You could say this is the biggest social experiment for families since the invention of formal education in the 19th Century. Just to clarify, most Millennials are doing this lockdown in their thirties with responsible jobs and young children. In many ways, COVID-19 is more defining for the generation following them, Generation Z (those born after 1997). Generations are usually shaped by the world events that take place in late adolescence (World War 2, 1960s upheavals, millennium and 9/11).
There are three areas – education, technology, and politics – in which Gen Z will be greatly shaped by COVID-19 and these will eventually distinguish them from Millennials.
Gen Z are digital natives who’ve grown up with the world’s network, market and knowledge in their pocket. They’re better prepared than any other generation for a lockdown. Social media is fueling their creativity. This generation learns, communicates and creates in moving images not words. But these digital natives also value face-to-face contact more than any other cohort. Could it be that for ‘Generation Corona’, human dialogue – whether in finance, consumption or learning – will become their definition of luxury and premium service?
Those who have had their exams cancelled may come to be known as the ‘Class of Corona’ and will certainly share the challenges but also the freedom of this experience as they enter the next stage of their career. Will this mean they are great independent learners and less reverential to educational institutions? Will they enter the job market expecting remote working?
Finally, Gen Z has had the misfortune of growing up in a period of systemic disruption; not just COVID-19 but economic instability, the rise of populism and climate change. This has made them more politicised, sceptical and radical. Gen Z has already demonstrated their identity as global citizens, joining Greta Thunberg in the great fight of their generation in saving the planet. However, the experiences of COVID-19 will also force them to think about the national and local context much more. Governments are subsidizing wages and keeping businesses alive while local neighbour groups are volunteering to keep households in food and medicine; will this context bring a new appreciation for the role of the state and awareness of what goes on in their neighbourhood?
The Baby Boomer generation (1942-1965) has for a long time dominated family, business and politics – in part because there are so many of them. They truly are exceptional in terms of wealth, time and quality of life. Will the luxury of their retirement years ever be experienced in the same way by subsequent generations? I doubt it.
Baby Boomers are now being forced to confront their fallibility and mortality. One of the most interesting aspects is how this is taking shape within families. I know countless Millennial friends who’ve found themselves in the perplexing position of nagging their seventy-something Baby Boomer parents to take this virus seriously and cancel trips, avoid social clubs and abandon their shopping or beloved coffee mornings. The coronavirus has therefore accelerated the care reversal process that’s inevitable within families. With Baby Boomers feeling vulnerable and their children feeling more assertive, the kinds of difficult conversations that have to take place about money and inheritance may now start happening. The ‘Great Wealth Transfer’ is something that’s been talked about for a long time, but there’s little doubt the pandemic will have re-focused households’ minds. Legacy planning will become more democratic, longer term and will of course take into account the very real prospect of a global depression and its impact landing disproportionately on the young.
If I were to describe Generation Z in four words it would be serious, sceptical, savvy, and fluid. They’re becoming known as Generation Sensible because they’re not indulging in the traditional behaviours that characterised previous generations of youth. They’re smoking less, eating less meat – but they’re also suffering from poor mental health.
Politics, economic disruption and tech prevalence has also made them quite a cynical generation – for example, they’re notoriously difficult to market to simply because they don’t trust brands.
Growing up with a smartphone has also generated a savvy entrepreneurial spirit. It’s been estimated that 70 percent of Gen Z in the U.S. are making their own pocket money and they’re not doing it in traditional ways, such as bar work or a newspaper round – they’re buying and selling goods online, organising events and designing content. In doing so, they’re developing business skills that will arguably serve them better than school qualifications in an automated world.
More than any other generation, Gen Z’s virtual and real identities are merged and are therefore much more fluid. It’s been estimated that Gen Z will have five different careers and work for as many as 17 different employers over their working life.
All this means Gen Z, especially those from high-net-worth (HNW) backgrounds, are more conscious of their wealth, status and advantage than previous generations. The term ‘woke’ refers to this new awakening amongst young people of structural and historic racial, economic and sexual inequality. Many are embracing a more nuanced (and therefore more difficult to understand) notion of how we relate to one another and the need for change. #MeToo for example has triggered a new wave of assertive feminism. This is coupled with the urgency of climate change; human’s stewardship over the earth is how this generation are defining ‘legacy’. At the moment, ‘wokeness’ may seem like a fringe movement but it will become wholly mainstream as brands and influencers start to convey these messages. Gen Z are asking serious questions about corporate transparency, ecological responsibility and the level of human interdependence that’s required to navigate everything from structural sexism to climate change.
Education and entrepreneurship are key ways of sustaining a curious mind but so too is the ability to concentrate. It’s said the average attention span of those in Gen Z is just eight seconds. Technology is wrecking humans’ ability to focus and apply ourselves.
Tech and the world of start-ups have inspired a generation who are now more likely to want to set up a business than buy a home.
I was speaking to a wealth manager last year who said he’d run a workshop on a private family business for the next generation of inheritors. The youngest son, just 14 years old, turned up at the event having researched to an impressive degree the history of the business; from investments, treatment of staff to profit and loss. He wanted a complete account of what, how and why the business had grown. He was articulate and asked difficult questions but the manager realised that this inquisitive mind and entrepreneurial spirit had to be encouraged rather than belittled.
Family businesses should expect a generation gap in values and approaches, the key thing is how to deal with it. Helping your offspring understand the world and culture in which the business was founded, the decisions you took, the personal and professional pressures you were under, the motivation and ethos of the business and how it’s evolved is crucial. So is allowing them to have a say. One of the defining characteristics of social media culture that’s seeped into the mainstream is that everyone thinks their voice is important and they have a right to be heard. Deference to history, age or hierarchy are no longer a given, which can be incredibly hard to accept for older generations. One trade off though is that by listening to Gen Z you’re effectively eavesdropping on the future. They’ll offer insights into the way the market, operations and values are changing. Listening to them will be crucial for the long-term survival of the business.
Three things make me optimistic about Gen Z. Firstly, their entrepreneurial spirit, which is more befitting the new world of work and business they’ll be operating in. Secondly, their sophisticated attitude towards technology, especially around data privacy and its impact on mental health, but also the way they use it to collaborate and create. Forget assumptions, they’re not passive spectators when it comes to their screens. Finally, they’re less individualistic than older generations; they seek out networks, rely on peer-to-peer reviews and see the collective as the only way to solve the challenges of the world. This may sound naïve and well-worn, but right now, it feels like a very important lesson.
This publication has been issued by Royal Bank of Canada on behalf of certain RBC ® companies that form part of the international network of RBC Wealth Management. You should carefully read any risk warnings or regulatory disclosures in this publication or in any other literature accompanying this publication or transmitted to you by Royal Bank of Canada, its affiliates or subsidiaries.
The information contained in this report has been compiled by Royal Bank of Canada and/or its affiliates from sources believed to be reliable, but no representation or warranty, express or implied is made to its accuracy, completeness or correctness. All opinions and estimates contained in this report are judgments as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. This report is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Every province in Canada, state in the U.S. and most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, any securities discussed in this report may not be eligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment advice.
This material is prepared for general circulation to clients, including clients who are affiliates of Royal Bank of Canada, and does not have regard to the particular circumstances or needs of any specific person who may read it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. To the full extent permitted by law neither Royal Bank of Canada nor any of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copied by any means without the prior consent of Royal Bank of Canada.
Clients of United Kingdom companies may be entitled to compensation from the UK Financial Services Compensation Scheme if any of these entities cannot meet its obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered for up to a total of £85,000. The Channel Island subsidiaries are not covered by the UK Financial Services Compensation Scheme; the offices of Royal Bank of Canada (Channel Islands) Limited in Guernsey and Jersey are covered by the respective compensation schemes in these jurisdictions for deposit taking business only.
We want to talk about your financial future.