Inside the Gen Z investing boom: Four technologies driving inclusivity for wealth management

It’s official. Gen Z is a generation of investors. With emerging technology helping to break down barriers for young investors at a faster pace than ever before, we could be on the precipice of a wealth management revolution. 

According to Charles Schwab’s 2024 Modern Wealth survey, Gen Z adults begin investing and saving at age 19 on average. This is significantly younger than the baby boomer generation, who began investing at an average age of 35, and millennials, who started at 25. 

The implications of these early starts can’t be overstated. Not only will Gen Z adults gain an average of a six-year head start in the investment landscape over their millennial counterparts, but it means that they begin their financial education considerably earlier. 

At the forefront of the Gen Z investing boom is technology that’s helping to drive financial inclusivity. The emergence of digital transformation in an industry that’s been slow to outgrow its dependence on legacy technology will level the playing field in wealth management. 

With this in mind, let’s explore four transformative technologies to drive inclusivity for Gen Z and their passion for investing: 

Unprecedented accessibility

One of the driving forces behind the Gen Z investing boom has been the explosion in wealth management apps available to retail investors today. In Europe, the digital wealth management market is projected to reach a volume of €3.5 trillion by 2028, representing a CAGR of 23.4% over the coming four years. 

The proliferation of platforms, apps, and open banking fintech initiatives promises to make wealth management more accessible and practical than ever before for young investors. 

Functional user interfaces mean that Gen Z investors don’t have to face lengthy paperwork and phone calls with wealth managers like their older counterparts, and intelligent fintech platforms like round-up apps have helped to ensure that everybody can build a savings account no matter their monthly income. 

The fintech revolution has made investing less hands-on for retail investors, and this plays into the hands of Gen Z, who are aware of the benefits of investing early, but may have otherwise struggled to commit time towards learning the industry’s ins and outs in any meaningful way at a young age. 

The age of financial literacy

Gen Z is the first truly connected generation, and this has helped to pave the way for unprecedented access to financial literacy tools. 

Social media platforms like TikTok have given rise to the ‘finfluencer’, and accounts offering financial education have helped to drive a new level of investing awareness among young adults. 

Today, the world’s biggest finfluencer is Humphrey Yang, who has amassed an impressive 54,317,401 followers, likes, and subscribers across various platforms at the time of writing. With 49.5 million likes on TikTok, Yang’s account offers a series of savings, tax credits, and general personal finance tips to help promote financial literacy to their followers. 

When utilised correctly, social media can be a great resource for the nuances of investing, helping young investors to better understand factors like their various trading options, the impact their strategies have, and taxation matters like the current CGT allowance levels, which will drop to just £6,000 in 2024/2025 tax year.

While the explosion of financial literacy throughout social media is undoubtedly causing more young investors to begin their investment journeys sooner, there are fears that misinformation could have the opposite effect on Gen Z investors and may threaten their wealth. 

According to a 2024 survey, 29% of 18-24 year olds claimed to have invested in meme stocks. This figure is almost double that of 25-44-year-olds surveyed. 

Despite this, Gen Z appears largely unimpacted by misinformation on social media, with 65% of Schwab survey respondents claiming that social media has no impact on their investments. Furthermore, 57% of respondents claimed that they are more likely to engage with a financial advisor, indicating that young investors are clued up about the advice they receive online. 

Harnessing the power of data

The emergence of open banking is helping investors to share their data across trusted third parties to help drive an unprecedented level of personalisation and tailored experiences. 

According to EY, more clients are willing to share their personal data with their primary wealth manager than with their doctor, provided that they’ll receive more relevant services and experiences in return. To quantify this, 72% of clients are willing to share their financial goals and ambitions as part of their investment strategy. Additionally, more than half are happy to divulge their aims and objectives, which can be key in delivering more focused services and engagement. 

Thanks to advancements in AI and machine learning, open banking platforms can optimise the value of this shared data, providing detailed spending breakdowns across expenses and forming bespoke investment advice based on each user’s behaviour. 

Embracing passivity

More Gen Z investors are benefiting from hands-off investment strategies thanks to integrated fintech services that round up spare change. 

There are many different round-up apps available in the United Kingdom and the US, and they work by automatically rounding up card and online purchases to the nearest whole value and adding the difference to a savings account, usually a stocks and shares ISA. 

This has helped to empower more young investors than ever to save in a passive manner and at a rate that helps them to remain relatively comfortable. 

These strategies are helping Gen Z investors to become more prolific savers than their older counterparts. In fact, Shepherd’s Friendly data shows that Gen Z saves around £100 more per month than Gen X, with an average of £410 saved compared to the £310 average savings of those aged between 45 and 54. 

The future of wealth

With Gen Z investors getting started on their investment journey earlier, the signs are good that younger generations are improving their financial literacy and acknowledging the importance of building wealth. 

The growth of fintech and the accessibility of services that were difficult to access due to long-standing inefficiencies in the past could help to drive more focused investment strategies at a comfortable pace for Gen Z and future generations. 

With improved financial literacy and the power of personalisation delivered through open banking, the future looks brighter than ever for wealth management and the young investors who have moved quickly to build a sustainable future.

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