How WealthTech Firms Are Simplifying Investing

A staggering $84 trillion is the amount of cash and assets that Generation X, millennials and Gen Z consumers are set to inherit from older generations over the next two decades.

This “great wealth transfer,” as it’s been dubbed, not only signifies a significant economic shift but also presents a unique opportunity for FinTech companies to expand their services, catering specifically to the preferences and needs of younger investors.

Leveraging innovative technologies like artificial intelligence, blockchain and mobile applications, these WealthTech solutions are streamlining processes, providing personalized financial services and democratizing investing, making it accessible to younger generations by reducing entry barriers.

For instance, apps like Robinhood have gained immense popularity among millennials and Gen Z investors by offering commission-free trading and automated investing options. These platforms allow users to invest in stocks, ETFs, and even cryptocurrencies with minimal fees and no account minimums.

As PYMNTS wrote in December, Robinhood has been pulling customers from larger, more established brokers like Fidelity, Charles Schwab and Morgan Stanley-owned E*Trade, with more than 150 account transfers exceeding $1 million at the time.

Acorns, a savings and investing app, is also making waves in the space. In October, the firm announced a new premium tier focused on the family, including complimentary access to GoHenry by Acorns, the money management platform for younger consumers it acquired earlier in April.

The premium tier, priced at $9 per month, includes Acorns Early for investing in a child’s future from birth and GoHenry, a financial education app for children ages 6 and older. GoHenry also allows parents to automate allowances, set spending limits and assign chores while children learn budgeting and money management skills through interactive “Money Missions.”

Subscribers also get live Q&A sessions with financial experts, $10,000 in free life insurance, a complimentary will and the option to customize portfolios with individual stocks and ETFs.

“We know that people who receive financial advice and support earlier in life are likely to have better financial outcomes,” Acorns CEO Noah Kerner said in a press release, adding that the solution enables “the whole family to unlock compound growth at every life stage” which is “the key to building wealth.”

Also on the investing front, robo-advisors like Betterment and Wealthfront utilize algorithms to provide personalized investment advice and portfolio management services. This is done by analyzing users’ financial goals, risk tolerance, and time horizon to create diversified investment portfolios tailored to their individual needs.

These tech-driven robo-advisors offer cost-effective investment solutions, appealing to tech-savvy millennials seeking convenient ways to grow their wealth.

Tackling Young Consumers’ Unique Needs

Beyond investing, FinTech firms like Chime (which recently topped PYMNTS’ provider ranking of credit card apps) and Varo Money are also disrupting the banking and payment services space by offering fee-free checking accounts, high-yield savings accounts and mobile banking apps.

These digital-first banks also offer features such as early direct deposit, automatic savings tools, and real-time transaction alerts, attracting millennials and Gen Z customers who value simplicity, convenience and financial transparency.

FinTech firms are also harnessing technology to address the unique financial challenges faced by younger generations, such as tackling mounting student loans.

A prime example is Betterment, which introduced a student loan management solution following its acquisition of Gradvisor, a college savings plan service, in 2022. The solution offers borrowers competitive interest rates and flexible repayment options, facilitating more effective management of student debt.

Earlier this year, Betterment expanded its offering with a commercial product that enables small business employers to automatically match employee student loan payments with a 401(k) contribution, further providing a unique and innovative approach to financial support for young employees.

“We know that student debt can be a major impediment to saving for retirement,” Betterment CEO Sarah Levy said in a Jan. 25 press release. “Our industry-first student loan 401(k) matching solution is a compelling addition to our modern 401(k) that will help to broaden plan participation to those whose student debt previously kept them from saving for retirement.”