I’ve never spent a dime on financial advice. Meanwhile, my baby boomer parents have hired a financial adviser for advice on retirement, investment and real estate.
Gen Zers are 65% less likely to turn to a professional with questions about their finances than baby boomers. We’re about nine times more likely to turn to our phones first, according to Policygenius.
“Younger people are digital natives who are accustomed to finding information quickly and easily online,” says Bernadette Joy, a personal finance coach and CNET expert review board member. “Social media platforms offer bite-size, relatable financial tips from influencers and peers, making the information more accessible and less intimidating.”
As a personal finance writer, however, I know we shouldn’t rely on whatever pops up on our TikTok feed. (Gen Z, try not to roll your eyes too hard). I find value in more diversified education opportunities, such as personal finance podcasts, books and documentaries.
Still, I’ve often wondered if younger generations are missing out on something. In some cases, it could be worth paying a professional for financial advice and guidance.
Why Gen Z doesn’t pay for financial advice
My generation is fairly new to investing and saving. Most of us just started contributing to a 401(k) in the last couple of years, if at all.
We also have different financial limitations: lower wages, higher student debt and less economic security. The cost of hiring someone to help with our finances just isn’t appealing when we can barely afford rent.
“Social media advice is free, while professional financial services can be outside their means,” says Joy.
Why boomers pay for financial advice
There are several reasons why older generations hire professionals for financial guidance, ranging from their specific money needs to their distrust of social media.
They have more complex financial situations
Boomers hold more than 50% of the wealth in the US. They have more assets to manage, according to Lanesha Mohip, founder of the Polished CFO and CNET expert review board member.
“Older adults have more complex tax and financial considerations from having a pension, investments and social security,” Mohip says.
Folks with more complicated financial portfolios benefit from professional help because there’s more of a risk if they make a sloppy financial decision, says Chris Urban, a certified financial planner and founder of Discovery Wealth Planning.
“Younger people are digital natives who are accustomed to finding information quickly and easily online.”
They grew up without the internet
My parents remember the days before the internet. (I’m sure you have at least one family member who never lets you forget that tidbit of information). Professional, in-person financial advice was the gold standard in an era when online information wasn’t possible.
Boomers were already well into their careers by the time the internet was widely available, so they have a built-in trust for financial professionals, according to Alaina Fingal, owner of The Organized Money and CNET expert review board member.
“Older generations are more leery of getting advice from other sources,” says Fingal. Our parents’ generation is more likely to value the education of a financial adviser.
They are closer to retirement
A record number of boomers are facing retirement in 2024. That opens up a whole new can of financial worms, according to Urban.
“Once you stop earning a paycheck, it becomes much more complex to develop and implement a plan to spend down your assets, while also trying to make them last as long as possible,” says Urban.
However, as you age, you don’t have time to take advantage of compounding interest, unlike younger generations, Mohip explains. “As aging comes into play, there’s less desire to take risks on investing and managing the principal of your assets sitting in the market,” she says.
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How to know if it’s worth paying for financial advice
The value of paying a certified professional for financial guidance will vary from person to person. Not every financial situation requires bringing in extra support, so weigh the risks and benefits first.
Major life events can leave us in financial limbo: suddenly inheriting a property, coming into a big windfall or having multiple types of employment when tax season rolls around. If you feel lost, you might benefit from enlisting help.
If you can’t justify paying a financial adviser and prefer to turn to free sources, here’s what you should look out for:
✔️ Trust but verify: Anyone can pose as an expert online, so double-check your source’s credentials to make sure they have experience on the subject. There’s nothing wrong with getting free advice, but take the time to verify that it’s legit and from someone reputable.
✔️ Never rely on just one source: Bad financial advice can lead to serious consequences. If you see something online that catches your attention, check to see what credentialed professionals say. Sometimes it’s worth asking a friend or relative for a gut check as well.
✔️ Evaluate the advice: Always be wary of money advice that sounds too good to be true. Influencers don’t always disclose if they receive compensation for reviewing a product or service. Make sure the advice is in your best interest and actually suits your needs.
Bridging the generational gap
Financial advice from certified professionals isn’t accessible to everyone who could benefit from it. At CNET Money, we aim to provide trustworthy and practicable tips and suggestions from a range of experts.
Gen Zers have grown up in a rapidly changing financial landscape with new technologies, investment opportunities and economic challenges. According to Joy, traditional financial education hasn’t kept pace with these changes, leaving gaps in knowledge.
“Bridging this gap requires adapting financial education and services to meet Gen Z where they are, online and in real-time,” says Joy.
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