Generation Z and Millennial Investors: A Ranking of the Most Used, Trusted Investment Tools | The motley fool (2024)

Gen Z and millennials are a unique and fast-growing group of investors.

They led the retail investment revolution and embraced new developmentsinvestments in services and resources, and digital natives have greater access to various sources of information to guide their investment strategies.

The Motley Fool's Generational Investing Tools survey asked 2,000 U.S. adults in November 2023 about the tools they use toto invest, the sources they rely on for investment advice and how they determine the credibility of those sources.

Key findings

• Cash-app (NYSE: SQ) is the most used investment app of all generationsof respondents to The Motley Fool survey.
• The user interface is the most important aspect of an investment app for younger generations, while baby boomers value competitive compensation and bank integration.
• Generations are divided based on where they get their investment information, with younger generations using social media more often and baby boomers sticking to traditional sources of advice, such as traditional investment media, financial advisors and news.
• All generations are more skeptical of investment advice via social mediathan from more established sources of investment information.

The most used investment apps per generation

Different generations prefer different investing apps, although Cash App is the most used investing app among all generations of respondents to the Motley Fool's Generational Investing Tools survey.

Continue reading below the table to view the app preferences by generation.

The investment apps that Generation Z uses

• The most used investment appamong Gen Z respondents is Cash App, with 50% saying they use it once a month or more, according to The Motley Fool's Generational Investing Tools survey.
• 11% of Gen Z respondents use acorns,a robo-advisor. Jerks are more popular with Generation Z and Millennials than with Generation X and Baby Boomers.
• Generation Z respondents used less oftenCharles Schwab(NYSE: ZW) (5%) inFidelity(NYSE: FNF) (4%) invest in apps compared to older generations.
• Gen Z respondents were less likely to use this than Millennials and Gen X respondentsMuntbasis(NASDAQ: MINT) (10% compared to 17% and 11% respectively). Research from the FINRA Foundation and the CFA Institute and Charles Schwab found that millennials are the most likely to invest in crypto, followed byGen Zand then Gen X, with a small gap between the younger generations and a larger gap between the older generations.

The investing apps millennials use

• The most used investing app among millennial respondents is Cash App, with 54% saying they use it once a month or more.
• Muntbasisis the second most used investment app among millennials (17%). That's the highest usage rate of any generation. This suggests that millennials are still relatively interested in crypto, despite its poor performance over the past two years. A May 2023 survey by the FINRA Foundation and the CFA Institute found that 57% of millennials are investing in crypto, compared to 55% of Gen Z and 39% of Gen X.
• Jerkused by 15% of millennial respondents, the highest usage rate of any generation.
• Millennial respondents reported using multiple investing apps more often than other generations. Only 17% of millennials surveyed said they don't use an investing app, the lowest of any generation.
• Millennials are more likely than any other generation to spend moneyRobin Hood(NASDAQ: CAP) (15%), loyalty (15%),JPMorgan(NYSE: JPM) (14%),SoFi(NASDAQ: SOFI) (14%),Alley(NYSE: ALLI) (13%),E*TRADE(NASDAQ:ETFC) (11%),Forefront(NASDAQ:VTI) (10%), stock (10%), improvement (9%) and aspiration (8%).

The investment apps that generation X uses

• The most used investment app among Gen X respondents is Cash App, with 37% saying they use it once a month or more.
• Fidelityis the second most used investing app among Generation X (12%), followed by Coinbase (11%). This is a reflection of the investment strategy of Generation X. A study by the FINRA Foundation and the CFA Institute found that Genindividual sharesand investment funds than the younger generations.
• 31% of Gen X respondents said they don't use an investing app.

The investment apps baby boomers use

• 55% vanbaby boomersrespondents indicate that they do not use an investment app.
• The most used investment app among baby boomers is Cash App, with 15% saying they use it once a month or more.
• To marryCharles Schwabused by each of the 10% of baby boomers surveyed. No other investing app was used by more than 6% of baby boomers.

The user interface is the most important investment app factor for younger generations; Baby boomers place more value on low rates and bank integration

For Gen Z, Millennial and Gen X respondents, an easy-to-use interface is the most important factor in an investing app. Baby boomers also value ease of use, but their top drivers are competitive fees and pricing and the ability to easily connect their investing app to existing financial accounts.

These factors are still important to younger generations, but to a lesser extent, perhaps because they expect these features from most investing apps. A lot ofthe best investment appshas no costs and connects seamlessly to most banks.

Customer support is another factor that baby boomers value more than younger generations.

Information about warehouses,investment strategiesand built-in research tools and analyzes are of moderate importance to respondents across generations.

Robo-advisor functions and functions related to environmental, social and management (ESG) factors are among the least important features of an investing app, regardless of age.

YouTube is the most common source of investment information for Generation Z and millennials

Age is a determining factor in where Americans can go for investment advice. Younger Americans in particular use social media more oftenYouTube(NASDAQ:GOOG) (NASDAQ: GOOGL), while baby boomers prefer professional financial advisors and other more traditional sources of investment information.

Where Generation Z gets investment information

• Social mediais the dominant source of investment information for Generation Z.
  • Gen Z respondents are more likely to turn to YouTube (47%) and TikTok (35%) than friends and family (31%) for investment advice, according to The Motley Fool's Generational Investing Tools survey.
  • Generation Z is more likely to use Instagram (27%), Twitter/X (27%), Reddit (23%) and Facebook (19%) than traditional financial media (18.7%) or a professional financial advisor (18%) .
  • This finding is consistent with a 2023 FINRA and CFA Institute study, which found that 48% of Gen Z investors use some form of social media to obtain investment information, while YouTube is used by 60%. A Bank of America survey found that YouTube and TikTok are the top social media platforms Gen Z uses to get investment advice.
• Generation Z respondents were less likely than any other generation to get their investment information from traditional financial media (18.7%), a professional financial advisor (18%), friends and family (31%), and newspapers and other news media (11 %). ).

Where millennials get investment information

• 48% of millennial respondents receive investment information fromYouTube, the video platform is the most common source of investment information for that age group.
• Friends and family(39%) is the second most used source of investment information among millennial respondents.
• Millennials are relatively heavy users ofSocial mediato invest knowledge, although their platform preferences differ from Gen Z and Gen X.
  • 38% of millennial respondents use Facebook for investment advice, compared to 19% of Generation Z and 21% of Generation X.
  • 30% of millennial respondents use Instagram to invest in information, compared to 27% of Gen Z and 10% of Gen X.
  • 24% of millennial respondents use TikTok to invest in knowledge, compared to 35% of Gen Z and 12% of Gen X.
  • 20% of millennial respondents use Reddit for investment advice, compared to 23% of Gen Z and 7% of Gen X.

Where Gen X gets investment information

• Friends and familyis the most common source of investment advice among Generation X respondents; 35% say they turn to their loved ones for investment information.
• Social mediais somewhat common among Gen X investors, but not as prevalent as among millennials and Gen Z.
  • While YouTube is the second most popular source of investment information for Generation ), Twitter/X (7%) and Reddit (7%).
  • Gen
• Gen X is more likely than any other generation to get closertraditional investment mediafor investment advice (26%).

Where baby boomers get investment information

• Baby boomers are unlikely to use social media for investment information and will instead turn more regularly to traditional sources of investment advice.
• Baby boomers most often use friends and family for investment advice (35%).
• Baby boomers are more likely to turn to professional financial advisors (29%), traditional investment websites (20%), and news media (17%) than any other social media.
• YouTube is the most popular social media platform for investment advice among baby boomer respondents; 16% say they use it. No other form of social media reached more than 6% of baby boomers surveyed.

The most and least reliable sources of investment advice

A professional financial advisor is the most trusted source of investment information among all respondents to the Motley Fool's Generational Investing Tools survey. Friends and family are the second most trusted source of investment advice across generations.

Books, SEC filings and other accounts are also highly trusted across all age groups. But beyond friends and family, the most trusted sources are among the least used, especially among younger generations.

Social media platforms are among the most used sources of investment information for younger generations and among the least trusted sources of information. YouTube is the exception, with respondents giving it a trust rating similar to traditional investment websites and higher than newspapers.

Older generations find social media less trustworthy than younger generations, and generational preferences toward social media platforms are evident in the survey responses.

NASDAQ came to the same conclusion in its own 2022 study, which examined investment trends across generations.

The study also found that social media content from financial experts was the most helpful, which is an important reminder that not all social media content is created equal. Well-researched social media content from qualified content creators can be useful and engaging, but it's important for investors to be able to separate the good from the bad.

Why are younger Americans most likely to turn to social media for investment advice, even though they generally view it as unreliable?

Convenience, entertainment and cost are possible answers. It's easier to search for one YouTube video or Reddit postspecific sharethen schedule an appointment with a financial advisor. For many Americans, watching TikTok clips or Instagram scrolls from select influencers is probably much more fun than reading SEC filings. Access to investment content on social media is also free; no subscription fees are required.

Generation Z disagreed with older generations on how to evaluate sources of investment advice

Generation Z and Baby Boomers have some disagreements about how to judge whether a source of investment advice is reliable.

For Generation Z respondents, the author's credentials and expertise are the most important factor when it comes to assessing the reputation of a new source of investment information. For baby boomers, this is one of the least important criteria.

Past performance is what Baby Boomers value most when evaluating a source of investment information, but for Gen Z it is the second least important factor. For millennials and Gen X, past performance is also an important factor.

Generation Z and baby boomers also disagree on how important it is that recommendations align with their investment strategy. It's the second most important factor for baby boomers, but one of the least important for Generation Z.

All generations consider the number of followers and posts an account has when determining whether it is a good source of investment information.

How generation gaps define investment behavior

Age is a determining factor when it comes to where Americans get their investment advicewhich apps they use to invest.

Younger generations, who grew up with smartphones in their hands and connected to social media, are more likely to use thisDe TikTok-video, Instagram feed, YouTube video or Facebook post than a financial advisor or traditional investment media for stock selection advice. Baby boomers tend to stick to the professionals for investment advice.

For millennials and Gen Z, and to a lesser extent Gen X, social media is likely the easiest way to access information that previous generations are more familiar with. Instead of watching a financial analyst discuss a company's earnings on TV, they can watch the same clip on YouTube or read an analyst's view on Twitter/X.

Despite their affinity for social media, our research results show that Gen Z and Millennial investors have a healthy dose of skepticism about most social media sources and know how to recognize credible information. It starts with understandingHow to research stocksand devising an individual process to form an opinion about a particular investment.

Sources

• Bank of America (2023). “Generation Z's financial priorities, barriers, and path forward by 2023."
• Charles Schwab (2022). “2022 401(k) Participant Survey - Gen Z/Millennial Focus."
• FINRA Investor Education Foundation en CFA Institute (2023). “Gen Z and investing: social media, crypto, FOMO and family."
• NASDAQ (2022). "ETPs empower the next generation of investors."

Methodical

The Motley Fool conducted an online survey of 2,000 U.S. adults via Pollfish on November 7, 2023. Results were post-stratified to generate nationally representative data by age and gender. Pollfish uses organic random sampling of units.

These are the age categories for each generation:

• Gen Z members are 11-26 years old. This study did not include respondents under the age of 18.
• Millennials are 27-42 years old.
• Generation Xers are 43-58 years old.
• Baby boomers are between 59 and 77 years old.

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