An undercurrent of hopelessness leads to bad financial habits, say advisors specializing in gen Z and young millennials
Canadian young people feel hopeless. Measured by global happiness surveys, statistics Canada reports, and the simple facts of house price appreciation and wage growth, young people in this country don’t see their lives getting much better. We can start to see why a growing undercurrent of young millennials and gen Z approach their finances with a sense of apathy at best and nihilism at worst.
Tara Lalehparvar and Curtis Holt-Robinson face that hopelessness every day. The co-founders of Skyward Financial specialize in serving younger clients. That doesn’t just mean the children of high net worth individuals. Lalehparvar and Holt-Robinson work with university and graduate students, new grads, and people just getting started in their careers, helping them to plan, invest, and develop better financial habits. They admit that hopelessness is one of the biggest barriers they face in their daily work.
“We had to learn early on to approach our practice so we immediately addresses that issue right off the bat, because the [hopelessness] is so large that it’s actually the first obstacle people face before they speak to an advisor,” Lalehparvar says. “It’s the first hurdle we cross, and we emphasize that things are not so bad, that finances are worth looking at and worth discussing.”
Holt-Robinson and Lalehparvar say that myriad factors play into the sense of hopelessness that young people experience. That could include the inaccessibility of housing, the rising cost of living, or a sense of not being able to keep up. It also includes more existential sources of dread, like climate change or the rise of AI. Holt-Robinson also adds that the experience of financial insecurity can be self-reinforcing. A young person who feels financially insecure will often make worse financial decisions, perpetuating a vicious cycle.
That vicious cycle manifests in daily, weekly, or monthly financial decisions. Many younger people are saddling themselves with debt, sometimes because they have to and sometimes because they don’t understand the repercussions. Lalehparvar and Holt-Robinson say that many young people are so stretched by the current cost of living that what little money they have left over won’t be saved or invested, instead it will be spent on a small reward, a ‘treat’ for making it through the month,
“They might have internalized that saving isn’t going to be worth anything, so they find a way to use that leftover money for a little treat at the end of the month,” Holt-Robinson says.
“People will have the mindset that they’ve struggled all month, they’ve worked so hard, and they have nothing to show for it, so they deserve to order some sushi,” Lalehparvar adds.
The undeniably bleak nature of so many young people’s financial worldview presents a serious challenge for the Skyward team to overcome. Lalehparvar says that they begin with their marketing materials, pushing against the tide to tell younger people with less assets that they also deserve financial services. Because most advisors preference higher net worth individuals, many young people think their only option is a DIY platform. They also may not have the knowledge base necessary to confidently use that platform.
Lalehparvar and Holt-Robinson focus first on financial education, offering free education sessions to prospective clients. They explain the basics in casual, approachable language, and get these young people some of the knowledge about investment, compounding, savings, and financial wellbeing that they need.
Sometimes they encounter clients or prospects with a greater knowledge of investing. However, that knowledge is more informed by the ‘gamified’ investing of meme-stocks and social media ‘finfluencers.’ They say that some of these young people treat investing more as a form of gambling, informed by that same desperate hopelessness telling them their only way to wealth is to hit it big on the next GameStop. Holt-Robinson notes that once those clients are shifted onto a more long-term sustainable approach, they begin to approach investing with less stress and a greater sense of purpose.
As other advisors begin working with gen Z and young millennial clients, Holt-Robinson and Lalehparvar emphasize the importance of understanding this hopelessness. Even as these young people begin to earn more and accumulate more assets, the habits and worldviews they’ve formed in these hopeless years can prove difficult to overcome.
“If a young person has now lived between five and seven years with 90 per cent of their income going to their basic survival needs — maybe due to school, or part-time work — it’s incredibly hard to relearn that way of existing,” Holt-Robinson says. “We’re seeing it now. Students are getting their degrees and working good jobs, but they are still in survival mode. I think you have to show them, visually, that they have money and they can build wealth. It’s a gradual process of relearning.”
