The future of investing: How GenZ is shaping the financial landscape
The future of investing: How GenZ is shaping the financial landscape
At 68.6 million people, GenZ is one of the largest segments in the US, making up 20% of the total population, according to 2023 US Census Bureau. Born between 1996 and 2010, GenZ is estimated to have a spending power of $450bn globally and $360bn in the US alone, according to the BBC.
As GenZ continues to grow in both size and spending power, this generational cohort is emerging as a critical customer segment for investment companies.
Although GenZ represents a significant opportunity for investment companies, they increasingly favor fintech platforms over traditional investment firms, despite the record-breaking success of top-tier banks’ in the near-term. Bloomberg recently reported that the top five US banks were expected to end 2024 with a 15% increase in trading revenue, reaching $24.5 billion—the highest in five years. Despite the top-tier banks’ recent successful track record, only 66% of GenZ investors have a traditional brokerage account compared to 92% of Boomer investors according to MacroMonitor, the largest survey of US households’ financial behavior.
How can traditional retail investment companies capture the GenZ market?
Understanding the behavior and preferences of this generation is crucial for attracting the next wave of long-term investors and sustaining continued growth for traditional retail investment companies.
The rise of fintechs for investment
One of the primary reasons is the gravitation towards fintech alternatives. According to MacroMonitor, fintech investing is much higher among younger investors with nearly a quarter of GenZ (23%) using only fintech for investments compared to 5% for Boomers.
Building trust through design
GenZ are digital natives and are more designed-focused than previous generations. They value a user-friendly and intuitively designed platform centered around accessibility and convenience. For example, Robinhood took a thoughtful approach to shaping its UX (user experience) and UI (user interface) to meet the needs of first-time retail investors, turning what was once a complex, exclusive process into a far more inviting experience. Their design philosophy centers around simplicity and ease of use, making the interface feel accessible, even for those without extensive financial knowledge.
For young retail investors, this approach transforms investing from something intimidating and exclusive to an experience that feels accessible to everyone. The app’s minimalist, clean design is a strategic decision aimed at reducing cognitive load, allowing users to focus on their goals without the clutter and complexity that often come with financial tools. With bold design choices—clear call-to-action buttons, a streamlined portfolio view, and intuitive interactions—Robinhood reflects GenZ’s design-focused values. As a result, Robinhood is the most widely used fintech platform for investing among GenZ.
This underscores the importance for investment companies to ensure they offer a digital experience that feels natural, engaging, and inclusive. Clarity, consistency and user-centered design are key features important to GenZ customers.
Social media influence on financial literacy
During the pandemic, GenZ doubled the time spent on finance and trading apps, underscoring a genuine interest in their financial health according to a report conducted by Global Wireless Solutions.
GenZ is used to instant access to information to inform all aspects of their life which means they use social media for financial advice more than older cohorts. YouTube is the most popular social media platform for searching or sharing financial information, with a quarter (25%) of GenZ and Millennials say they use YouTube vs and 14% of Boomers.
With the rise of TikTok and Reels, one key trait of GenZ’s consumption habits is a shorter attention span. Unlike past marketing strategies, capturing the attention of younger audiences now requires short, engaging videos that get straight to the point, rather than relying on articles and blogs. This shift presents a unique challenge for marketing to the Gen Z segment. While social media makes it easier to reach this generation, it also makes it more difficult to inspire action from them. This also creates a danger to investors as in certain instances, they are relying on the advice and insights of influencers with little experience, formal education and training in investing.
A best practice when using influencers for financial advice is ensuring transparency and disclosure of partnerships. For example, if an influencer recommends a financial product, service, or platform, they should clearly indicate whether they have a business relationship with the company. This practice helps the audience understand that the influencer may have a financial incentive behind the recommendation, allowing them to make more informed decisions.
Democratizing investing and bridging the knowledge gap
80% of GenZ look for the lowest-cost financial service solution compared to 77% of millennials, 71% of GenX and 68% of Boomers. This preference reflects another core GenZ value—financial inclusivity—which is rooted in their desire for equal access to financial opportunities, education, and tools, regardless of socioeconomic background.
Low-cost financial services appeal to GenZ because they align with their belief in democratizing investing—eliminating barriers such as high fees, minimum account balances, complex processes, and exclusive investment options that have historically excluded lower-income individuals. They look for investment companies whose values align with their own and empower individuals from all backgrounds to participate in the financial markets, helping them build wealth, plan for the future, and take control of their financial well-being.
Three ways to engage GenZ
Through acquisition or building their own customer base, traditional investment firms need to embrace the next wave of investors to continue their success. Here are three key strategies to effectively engage GenZ with traditional retail investment companies.
- An intuitive and well-thought-out UX/UI is essential. This generation values seamless, user-friendly platforms that make the investment process simple and accessible.
- Offering low entry fees is crucial. GenZ are often just starting its financial journey and may not have large amounts of capital to invest. By lowering these barriers, companies make investing more approachable.
- Providing educational content in engaging short-form formats—such as bite-sized videos or infographics—can help demystify investing and keep GenZ informed without overwhelming them. Influencers used to promote these platforms should be transparent, clearly disclosing any partnerships with the investment firm to maintain trust and credibility.
This combination of ease, affordability, and accessible learning is key to capturing the GenZ customer segment in the investment market.
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