Traditional retirement planning not an option for Gen Z: financial planner

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  • Nate Hoskin is one of the youngest CFPs in the United States after earning his certification at age 22 in early 2021.
  • He works largely with younger clients, who he says need to radically rethink retirement planning.
  • It suggests side hustle and passive income to clients, as opposed to 401(k)s and traditional IRAs.

When Nate Hoskin, a 24-year-old Certified Financial Planner, saw a statistic that only 4.3% of all CFPs were under 30, he called the Certified Financial Planners Standards Council to ask if there had planners younger than him. in its archives. After that call, he realized he was one of the youngest financial planners in the whole country – if not the the youngest.

One of the reasons the profession is aging is the education and work experience requirements to become certified. Any potential CFP must have completed a bachelor’s degree, additional coursework that typically lasts a year, and 6,000 hours of financial planning or 4,000 hours of apprenticeship under the guidance of a certified planner.

But Hoskin experienced a few unique circumstances that allowed him to qualify at a much younger age.

“I was working my freshman and senior year of college directly under a CFP,” Hoskin said. “My first job was at a quantitative hedge fund which I didn’t really like, so I moved into wealth management and was able to go down the apprenticeship route. I was able to start the process very quickly. .”

Then, just as Hoskin started studying for the exam in March 2020, the COVID-19 pandemic brought everything to a halt.

“I had nothing to do,” he said. “I was not allowed to enter the office. I had no social life.”

So he decided to spend his pandemic days focusing on his financial planning classes and completed the course – which usually takes 12 months – over a span of about three months.

“I probably studied for over a thousand hours on my own,” Hoskin said. He took the board exam in April 2021 and passed it, earning certification at the age of 22.

When asked why he wanted to become a financial planner, Hoskin said he was initially motivated because he believed that even if he didn’t become a professional planner, he could still use that knowledge to his advantage. He added that earning the certification gave him “an insane amount of knowledge about very complicated products, as well as the taxes of trust systems.”

Experiencing all the economic uncertainty of the pandemic and seeing many of his friends laid off earlier in the pandemic only strengthened his resolve to continue learning wealth management, not only for himself but also for people. who need help as they try to navigate the current. economic circumstances.

“People need someone who can help them through these financial decisions they make,” Hoskin said. “That’s why I came to the more analytical side. I was into portfolio management and quantitative analysis in college.”

Ultimately, Hoskin ended up opening his own business, Hoskin Capital, and directs much of his educational materials and outreach toward younger clients. He has around 200,600 followers on TikTok, where he posts informative videos on retirement, investing and wealth management as a financial planner.

When asked what he thinks is the biggest financial problem facing his generation, he said he has two things on his mind: self-reliance at work and planning for retirement.

Gen Z won’t experience work or retirement like other generations have

Hoskin said retirement is going to be very different for Gen Z for a variety of reasons.

“We don’t believe we’ll get Social Security or see a situation where we can really rely on that income,” Hoskin said, adding that members of his generation would also live longer than those of all previous generations. .

“So when we look at more traditional retirement planning strategies, they don’t work for us because the time you expect to spend working and the time you expect to spend in retirement come closer together. plus at the same length,” Hoskin said. “It’s really hard to effectively create a retreat strategy around that.”

Ultimately, he said, this leaves many workers in the Gen Z cohort feeling that their retirement options are both limited and bleak.

“Work longer? No thanks – pass,” Hoskin said. “And anyway, we don’t have the same standards for what’s expected of us as a workforce because I don’t know a lot of people who are planning to work in their current role over the course of of the next 40 years. We have no incentive to do that because pensions have taken over pretty much everything else.”

For workers his age, he said, it has become very clear that planning for retirement is the responsibility of the individual, not the employer. This should make young workers wonder about where they want to work.

Gen Z workers need to chart individual career and retirement planning paths to keep up with the changing times

Hoskin said he thought it was “laughable” when it was suggested that Gen Z just doesn’t want to work. What’s happening, he says, is that young workers are measuring the value of their time and work against what their companies are offering them and planning around their needs and interests.

“We’re creating an entirely new approach to careers,” Hoskin said. “Because if you’re going to tell me I have to work until I’m 70 or 75, I have to do something that really feeds me.”

Ultimately, Hoskin said he believes for many people this will mean working for themselves and developing multiple streams of income. It will also serve them well in retirement, because by working for themselves and having multiple sources of income, it becomes easier to replace income when you decide to work less or leave the traditional 9 at 5.

“For the past 100 years, the way people have replaced their income has been to save as much money as possible and invest it in something they can retire on,” Hoskin said. adding that it was much less effective. now because “it’s really hard to save enough and be able to stretch it long enough”.

“The main thing I’ve communicated to my clients is that they need to replace income with something else,” Hoskins said, adding that he strongly encourages his clients to consider alternatives to a 401 ( k) or a traditional individual retirement account. when it came to planning for retirement. He said developing independent side businesses and investing in things like real estate would help them get a head start.

“People are making a lot of money doing things they’d like to do outside of the traditional business structure,” Hoskins said. “I think that’s how people will plan for retirement in the future.”

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