The World Economic Forum’s Global Retail Investor Outlook 2024 confirms a sustained shift towards younger retail investors.
Spanning 13 economies, including South Africa, the research finds that 30% of Gen Z start investing in early adulthood – compared to 9% of Gen X and 6% of Baby Boomers.
By the time they enter the workforce, 86% of Gen Z have learned about personal investing versus 47% of Boomers, underscoring a generational transformation in financial habits.
Developed in partnership with Robinhood Markets and Boston Consulting Group, this latest global research also highlights emerging tech trends. Younger generations are also more open to tech and AI enabled financial advice, with 41% of Gen Z and Millennials reporting they would allow an AI assistant to manage their investments. Only 14% of Baby Boomers said the same.
“Younger generations and individuals in emerging markets are increasingly interested in investing to build wealth and enhance their financial stability,” says Natalya Guseva, head of financial markets and resilience at the World Economic Forum.
“Given this sustained shift in investment demographics, it is critical for leaders to reassess the retail investing landscape and ensure individual investors are equipped with the right financial education and investing tools that support their financial goals.”
The research shows that younger investors and those from emerging economies use a wider variety of information sources, including peer networks and social media – these provide relatability, especially for those historically excluded from capital markets.
Fifty-seven percent of emerging market investors found social media important when learning to invest, compared to 43% in developed markets; 70% found robo-advisers key when learning to invest, compared to 52% in developed markets and 69% found financial education in university or graduate studies significant when learning how to invest, compared to 57% in developed markets.
Addressing gaps in financial education
Widespread inclusion of financial education in schooling can help establish a universal baseline of financial literacy, with research showing that this positively impacts individuals’ ability to manage personal finances, including debt management, long-term wealth planning and retirement investing.
A total of 24% of Gen Z and 19% of Millennial investors learned how to invest in university or graduate studies, and 16% of Gen Z and 13% of Millennials learned how to invest in high or primary school, however significant gaps in financial literacy persist, with over 60% of young adults worldwide (under 35 years old) still not meeting financial literacy standards.
As Gen Z and Millennials invest more in complex products such as alternative asset classes (covering more than one-third of the portfolio for 74% of Gen Z investors) and crypto (covering at least one-third of the portfolio for 62% of Millennial investors), addressing gaps in financial education becomes increasingly important, especially for matching portfolio allocation with their optimal risk-return profiles.
Building long-term financial well-being
Perceived financial well-being varies across geographies, with higher confidence levels encountered in emerging economies. In South Africa, 78% of survey respondents confirmed that they are able to meet their daily financial needs, however just over half (55%) are confident that they could handle a major unexpected expense.
The ability to manage a significant unexpected expense is a key indicator of an individual’s financial resilience. More than half of local respondents (53%) are worried about outliving their savings with these concerns stemming from a low savings rate (14%).
Rising debt in emerging middle-class households makes liability management crucial, especially in South Africa, where 40% of respondents struggle to meet their debts and liabilities. High household debt levels put pressure on short-term financial objectives and create a need for holistic wealth planning mindsets. With over half of global respondents (54%) managing household liabilities, holistic financial strategies that integrate debt repayment with investing and saving are critical, especially given the prevalence of long-term loans and home loans.
Retail investor trends
The survey finds retail investors increasingly view cryptocurrency as more understandable and easier to understand than traditional investments like ETFs, mutual funds, bonds, and stocks. While 29% avoid stocks due to a lack of understanding, only 24% say the same about crypto. Among investors under 44 who hold cryptocurrencies, more than half allocated at least a third of their portfolio to it.
Financial priorities are shifting towards short-term needs. In 2024, 51% of investors prioritised emergency savings, up from 41% in 2022, while those focused on having enough to retire dropped from 48% to 42%.
For non-investors, the biggest barriers were lack of funds and fear of financial loss. More than half say they would have felt more confident investing if they had learned about it in primary school.
In addition to younger investors being more open to AI driven financial advice, the survey also finds that 48% of individuals from emerging markets across all ages would allow an AI assistant to manage their investments. In South Africa, 42% of respondents confirmed that they would trust AI with their financial information, while 14% have selected an AI chatbot to gather financial decision-making guidance and 38% would allow an AI assistant to manage their investments.
In emerging economies, limited historical access to financial advisory services has created a gap that AI tools are helping to fill with accessible, cost-effective guidance. This positions emerging economies with the ability to “leapfrog” technologically, making their investors likely early adopters of AI-driven wealth management solutions, potentially advancing financial inclusion.
“Innovations that lower barriers to entry and enrich digital advice with intrinsic guidance can help make financial advice more accessible, enabling more people to participate in the markets with greater confidence,” says Steph Guild, senior director: investment strategy at Robinhood.
The benefits of retail investing
“Individual participation in capital markets has the potential to enable long-term financial well-being,” comments Dean Frankle, MD and partner at BCG, “Industry stakeholders must work together to equip retail investors with the best tools, education and access.”
The research highlights several steps stakeholders in the retail investing ecosystem can take to empower individuals.
- Developing financial products and platforms that prioritise individual investors – As new generations enter capital markets, evolving investor needs will require new financial products and platforms that expand past those traditionally tailored for institutional investors. Products that address key barriers including uncertainty, capital constraints, and market volatility can drive inclusion, confidence, and better outcomes for retail investors.
- Leveraging technology to enhance affordability and accessibility – Technology can make financial advice, portfolio building, and education more accessible and affordable for retail investors. AI-driven solutions have the potential to streamline financial advisory processes, enabling portfolio design and advisory services at more accessible price points.
- Implementing policies that empower and protect retail investors – Effective policies should equip investors with the necessary tools to navigate markets confidently while fostering innovation and safeguarding individuals. This could include expanding auto-enrolment in pensions, promoting fee-only and conflict-free advisory models, and implementing robust investor protection frameworks to help individuals manage risks in alignment with their financial goals.