Generation Z may be asset managers’ dream come true.
The nation’s youngest workers are the most willing of all age groups to share their personal data, making it easier for asset managers to develop what they call personalized target-date funds, the next evolution of the popular set-it-and-forget-it funds found in almost all workplace retirement plans, according to a new report from Cerulli Associates.
Personalized target-date funds are designed to offer participants “a more tailored retirement solution,” said Idin Eftekhari, a senior analyst at Cerulli, in an email.
Eftekhari added that unlike traditional target-date funds, which primarily consider only a participant’s planned retirement age, personalized target-date funds factor in variables such as participant income, account balances and contribution rates.
“Asset managers leverage these variables to calibrate a more optimal asset allocation for participants as they progress to and through retirement,” he said. “Ultimately, the goal is to create an investment mix that closely aligns with each participant’s unique circumstances and investment objectives.”
Of all demographic groups, Gen Z displayed the greatest willingness to share individual pieces of personal data, according to Cerulli. For example, 45% of Gen Z participants said they are very comfortable sharing their current and/or projected spending with their 401(k) providers, compared with only 32% of millennials and 36% of Generation X and baby boomers who expressed the same comfort level. Gen Z was also more willing to share their retirement savings and account balances, with 51% saying they were very comfortable doing so. Among millenials, Gen X and baby boomers, only 47%, 44% and 37%, respectively, said the same.
The survey findings come from Cerulli’s 401(k) plan participant survey, which sampled 1,500 401(k) participants in the first quarter of 2023.