Understanding generational tendencies is critical to unlocking shifts in retail investor attitudes and profiles. In partnership with Morning Consult, a new study by Nasdaq sought to find and understand the drivers of these changes in investor attitudes across generations. The study revealed the economic concerns across generations Z, Millennials, X and Baby Boomers and what informs their investment decisions, from the most attractive exchange traded product (ETP) investments to the mediums through which they get their financial news.
From these insights, the study aims to help ETP issuers, financial advisors and asset managers tailor their services to the needs of investors, personalize outreach strategies and help clients grow their portfolios.
Economic Concerns Across Generations
Key takeaways from the study showed key shifts in investment goals and concerns comparing older and younger counterparts.
While all investors cited inflation and recession as their top economic concerns, younger investors, mainly Gen Z and Millennials, feel especially concerned with housing, unemployment and student loan debt. A vast majority of these generations, specifically 89% of Gen Z participants and 78% of Millennials, reported feeling concerned about housing and real estate, reflecting national concerns over the current U.S. housing crisis.
The Importance of a Financial Advisor
Whether those surveyed used a financial advisor also influenced their investment decisions, mainly their interest and participation in exchange-traded fund (ETF) investment. According to the study, younger investors tend to employ financial advisors more often than their older counterparts. For instance, 80% and 69% of Gen Z and Millennial ETF investors, respectively, reported using a financial advisor, but financial advisors were popular across the board, with more than half of each demographic reporting using one.
Among those who use financial advisors, 53% currently invest in ETFs, and 41% currently have $250k or more invested in ETFs. In contrast, among those who do not use financial advisors, just 34% currently invest in ETFs, and only 8% currently have $250k or more invested in ETFs.
ETFs of Interest by Generation
For those who invested in ETFs, interest in thematic ETFs showed a significant change from 2021 across generations. Cryptocurrency and digital assets were the most interesting ETF investment themes for 53% of Gen Z retail investors in 2021. In 2022, this interest decreased to 26% of Gen Z investors. In fact, this decline was felt across generations, with an 18-percentage point decrease, a 16-point decrease, and a six-point decrease among millennial, Gen X and baby boomer retail investors, respectively.
Environmental, Social and Governance (ESG) ETFs also took a hit in interest, particularly among younger investors. In 2021, 34% of Gen Z investors indicated they were most interested in ESG as an ETF investment theme. But this interest waned in 2022, with just 12% of Gen Z investors showing this was their most important investment theme.
Millennials also cut their interest in half, with a 14% interest level in ESG ETFs, down from 31% in 2021. Meanwhile, Gen X and baby boomers’ interest in ESG mostly remained steady.
In comparison, new and trendy ETF thematics surrounding autonomous tech and robotics have seen a spike in interest, especially with Gen Z. Autonomous tech and robotics more than doubled in 2022, up to 56% from 27% in 2021. Millennial interest in robotics and autonomous technology also showed growth, with an 8% uptick in 2022 up to a 42% interest, respectively.
Social Media and Engagement
The study also polled investors on how they receive their financial news, highlighting the mediums that attract investors in different generations and where they look for it. Gen Z investors enjoyed the largest array of mediums, with at least 70% interest across infographics, podcasts, online videos and online articles when receiving ETF investment information.
Millennials and Gen X have waning interest across digital mediums compared to their younger counterparts but are still mostly interested. Gen X showed a preference for online videos and articles, while baby boomer investors clearly have less interest in these mediums across the board, except for online articles at 45%.
On social media, Twitter and TikTok’s influence is growing among key retail investor age groups, a new shift that may be important to watch when considering outreach strategy. The use of Tik Tok as an investment information resource rose by 9% across generations between 2021 and 2022. Its use increased significantly among Gen Z investors, climbing 18 percentage points from 2021 to 73% in 2022. The spike in the use of Tik Tok was also seen in Baby Boomers, up 16 percentage points in just one year, from 9% to 25%.
Meanwhile, the use of Twitter has declined marginally for all retail investors but may be having a renaissance among Gen Z, with 78% of users recording it as a source, up from 54% in 2021. Baby boomers again joined their Gen Z counterparts, with the study reporting a rise in Twitter usage by 17 percentage points, up to 42% from 25% in 2021.
While social media is on the rise when it comes to investment news, most TikTok and Twitter users still receive the bulk of their information on ETFs from TV news, finance-specific publications and conversations with family and friends. However, “the jump in usage and interest shows that financial information through the medium of social media is gaining traction,” the report said.
The insights gleaned from this report are especially important for ETF issuers and financial advisors as they tailor outreach strategies for new investors. By better understanding investor trends and interests, both ETF issuers and financial advisors can tailor products and services to match clients’ needs across generations and stay relevant to what clients seek to grow their portfolios.
Want a deeper dive? Visit the site to view the survey’s key findings and access investor profiles for each generation.
