Understanding the next generations of investors
The Canadian population is a tapestry woven from several generations, each shaped by unique historical events. While the baby boomers and Generation Jones were moulded by postwar prosperity and shifting social paradigms, Gen X came of age amid rapid technological advances and global changes. Millennials and Generation Z, however, are truly digital natives. Millennials were shaped by the internet, 9/11, and the 2008 financial crisis, while Gen Z has grown up in a world defined by social media, climate change, and the rise of artificial intelligence.
This demographic transformation is further propelled by higher immigration rates among millennials and growing diversity in origin, religion and gender within younger generations.
Key characteristics of younger investors
Education
Education stands as a powerful differentiator. Millennials are the most educated generation to date, with approximately 70% of those aged 30-34 holding a post-secondary credential, which is significantly higher than Gen X at the same age3.
This educational advantage may partially account for why millennials tend to have higher real median after-tax household incomes, for inflation, compared to boomers and Gen X3 at equivalent ages.
Asset accumulation
Asset accumulation among millennials has also surpassed that of their prior generation. Early in their professional lives, millennials had on average a median asset level twice as high as Gen-Xers3 when adjusted for inflation. Much of this asset growth may be linked to rising property values and increasing household earnings.
Conversely, they faced a much higher debt-to-after-tax-income ratio than the previous generation at the same stage, primarily because of increased mortgage debt3.
Digital literacy
Digital literacy is another defining trait. Both Generation Z and millennials are comfortable navigating digital platforms for financial information and investment management. Gen Z, for instance, relies heavily on social media, internet searches, and family to learn about investing4. Platforms such as YouTube, Instagram, Reddit and TikTok are favoured sources, reflecting the digital-first approach of these demographics.
Distinct investment behaviours
Investment behaviour among younger Canadians differs from that of older generations:
Early investors
Gen Z tends to start investing earlier, with a quarter beginning before age 18, which is twice the rate observed among millennials by the same age4.
In an industry survey, nearly three quarters of Gen Z investors owned at least one investment product, often prioritizing emergency funds and retirement savings4.
Leaders in self-directed investing
About half of Canadian investors have a self-directed investment account, a figure that has increased fivefold in recent years5.
The fastest-growing demographic in this market is among Canadians aged 18-245. Independence, lower costs, and digital convenience are among the chief motivators for this shift.
Increased risk tolerance
Younger investors also exhibit a higher appetite for risk, with nearly half willing to take substantial or above-average risks to achieve financial goals4.
Interest in sustainable investing
Sustainable and responsible investing is a priority for younger generations.
In an industry survey, 71% of Canadians aged 18-34 considered ESG (environmental, social, governance) criteria crucial in their purchasing and investment decisions6.
Needs and opportunities
Despite their digital fluency and easy access to information, a majority of Gen Z respondents believe they need professional financial guidance to reach their goals 7. Younger generations are seeking holistic, relationship-focused advice that takes into account their unique financial journeys. Many are anxious about inflation, the cost of living, housing and student debt, underscoring the importance of personalized, empathetic advice. In addition, millennials and Gen Z are less likely to be married or living with a partner 8, making individualized financial planning increasingly relevant.
Educational gaps persist as well. Many young Canadians are unfamiliar with investment vehicles such as FHSAs (First Home Savings Accounts) or TFSAs, which presents an opportunity to enhance their financial literacy.
Furthermore, a substantial intergenerational wealth transfer is anticipated.
Between 2023 and 2032, an estimated $1,275 billion in wealth will be transferred in Canada 9, positioning both millennials and Gen Z to inherit and manage significant assets.
Many millennials will seek expert advice to invest or save their inheritance, reduce housing costs, or pay off debts.
Best practices for wealth advisors
To attract and retain younger clients, investment specialists must embrace a hybrid approach that combines personalised advice with digital presence and real-time account access. Here are key practices to achieve this:
- Building a strong social media presence: This includes actively engaging with potential clients in online spaces or posting insightful comments and articles to broaden reach and enhance credibility.
- Engaging early: Advisors who initiate relationships with young clients at the beginning of their financial journey can establish lasting loyalty. Including the broader family in financial conversations ensures smooth wealth transfer and continuity.
- Providing clear, goal-focused advice: It should address essentials such as emergency funds and retirement, while clearly explain fees and value-added services.
- Presenting alternative investments: For instance, access to private market options or other more specialized investment solutions may help align investment specialists’ offerings with the interests and risk preferences of younger investors.
- Enhancing financial literacy: Investment specialists may suggest reliable resources such as news sources, podcasts, guides, workshops or digital tools to help young investors gain financial knowledge and make informed decisions.
Forging new, lasting relationships
The next generation of Canadian investors brings new perspectives, values and expectations to the advisor-client relationship. By leveraging technology, engaging early and offering personalized service, investment specialists are well-positioned to forge lasting relationships and help younger investors to achieve long-term financial success.
Sources
1. Statistics Canada. Millennials now outnumber baby boomers in Canada, p. 1, Feb. 21, 2024.
2. Statistics Canada. A generational portrait of Canada’s aging population from the 2021 Census, p. 7, April 27, 2022.
3. Statistics Canada. Economic Well-being Across Generations of Young Canadians: Are Millennials Better or Worse Off?, April 18, 2019.
4. FINRA Foundation-CFA Institute, Gen Z and Investing: Social Media, Crypto, FOMO, and Family, p. 11, May 2023.
5. DIY investor in Canada? Here’s what you need to know about risks and reward, WP Wealth Professional, Feb. 18, 2025.
6. Canadian Business, Climate Change Is Influencing How Young People Invest Their Money, Jul. 10, 2023.
7. Advisor.ca, Tips for winning over gen-Z clients, Aug. 20, 2024.
8. Statistics Canada, State of the union: Canada leads the G7 with nearly one-quarter of couples living common law, driven by Quebec, July 13, 2022.
9. Investor Economics, Household Balance Sheet Update and Rebased Forecast 2024, Aug. 20, 2024.
Learn more
Complete our free online training, "Advising the next generation of investors," and obtain 1 PDU (Professional Development Unit) using your broker code and rep code on our Continuing Education Portal. For more information, contact your NBI sales representative.