From gold to cryptocurrencies, real estate and ESG investments, it can be hard for advisors to get a real handle on what’s in the portfolios of Canadian Gen Z and Millennial investors – but it’s quite a lot.
In fact, Canadian Gen Z investors are willing to invest more compared to their counterparts in other countries, according to 2023 research from the CFA Institute and the Financial Industry Regulatory Authority (FINRA).
That study found that 74 per cent of Canadian Gen Zs who are between 18 to 25 invest a median of $9,000 and own at least one investment in crypto, mutual funds and individual stocks.
But are their and millennial investing habits any different from previous generations? We asked two millennials and two advisers who work with Gen Z and Millennial investors what, where and how they invest or manage portfolios.
Penchant for passive, open to active
Sam Lichtman, a certified financial planner and owner of Millen Wealth Advisors says that younger investors like having control of their money.
“They are also willing, from my experience, to give it up (to be managed) if the value they’re receiving is over and above what they’re paying in fees,” he says.
Terry Wright, CIM and partner at LT Wealth Management, says that Gen Z investors have ETFs that track the market but are willing to take a few risks with their portfolios.
“They believe that it is impossible to beat the market,” he says. “However, there’s always a gambling side, knowing that they’re working and can recoup this loss through employment earnings. There’s more exposure to crypto and fractional share trading.”
What he noticed is that Gen Z and Gen X are similar with their wealth management. Boomers had company pensions that were often defined benefits, which meant more employer contribution and indexed to inflation.
“Gen X often doesn’t have a defined contribution pension plan. They’re responsible for their own retirement savings.”
Millennials, having a bit more investing experience, tend to set it and forget it, says Wright.
“Passive investing index tracking is the best way to go. It reduces your risk of underperformance while saving you a ton in fees,” he says. “I would argue that millennials, after getting a little bit of experience with gambling through crypto and cannabis, start to realize, ‘oh, okay, I can just set up an automatic monthly purchase plan or monthly contribution plan to an RRSP or TFSA, buy a low cost index tracking, or an ETF, and we’re off to the races’.”
Higher risk tolerance
Lichtman concurs. His higher-networth Gen Z and some of his millennial clients have more alternative investments in their portfolio.
“This aligns with the Bank of America study which shows that about 17 to 20 per cent of wealthier investors from ages 21 to 43 actually tilt their portfolios towards alternative investment,” he says, adding that by age 44, clients have around five per cent of their money in alternative investments.
Elena Iacono, the founder of LegacyNex and a millennial, says that her personal portfolio is diverse with ETFs, gold and some real estate from her and her husband’s property in Miami, Florida. They manage their portfolios on their own – although it does help that her husband is a certified financial planner and an advisor.
However, Iaconco keeps her business separate.
“I do have two advisors who are my partners for LegacyNext. I do talk to them to get their perspective,” she says.
“I’m trying to get advice on becoming more independent so I can manage (the business) on my own.”
She is also interested in increasing her real estate holdings and looking into venture philanthropy.
Diversified management
Minnelle Williams, an end of life educator and owner of Ending Well with Minnelle, manages some of her investments and has advisors manage the rest.
While she didn’t get a lot of investment education growing up, she found her investment community through TikTok. She often talks with her friends about where to invest next. Recently, the conversation has been around gold, which tends to become more popular as a steady investment when the markets are in turmoil.
“We were having these bunker conversations, you know, when the world goes crazy, what are we gonna do?,” she says.
But it’s not all doomsday planning for Williams.
“Because I need fun in my life, I invested in some art.”
