Same old story: Gen Z interested in investing but lack professional advice

This comes at a time where, in general, the professional pool of advisers is shrinking and is struggling to service a larger number of Australians, with under 45s the least accessed group.  

Regardless, Vanguard’s recent report, Sitting on the sidelines: What’s holding Australia back from investing, has found that 45 per cent of Millennials and Gen Zs surveyed are investing in shares, exchange-traded funds (ETFs) or other financial products.  

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It also revealed that younger Australians are more active across a wider range of investment options. 19 per cent of Gen Z Australians are reporting holding ETFs, compared to only 4 per cent of Australians over 60. 

 Similarly, 18 per cent of Gen Z reported they hold cryptocurrencies, with only 2 per cent reporting this in the over 60s category.  

“This research confirms what we’re seeing on the ground: young Australians are increasingly interested in investing and more likely to be using ETFs,” said Vanguard Australia managing director, Daniel Shrimski. 

Moreover, Gen Z also expressed the highest level of interest of getting into investing, with 52 per cent expressing the aspiration to get into investing, well above the average of 34 per cent for all age groups.  

But a tale as old as time (or at least as old as the time the majority of the generation became adults) remains, Gen Z are not receiving advice on their investments, at least not from professionals.  

“Young people are feeling locked out of the market because the industry to this day focuses on supporting older, wealthier Australians,” Glen Hare, co-founder and adviser at Fox & Hare Financial Advice, told ifa. 

“The average age of an advised client is 58 and most firms still have pictures of golden oldies on yachts sailing off into the sunset.” 

A lot of Gen Z are increasingly relying on basic advice provided by easy to access investing websites and apps, which often leans on the heavily conservative side. According to Craig Semmens, chief executive of strockbroking firm Phillip Capital Australia, this kind of easy access can have negative impact. 

“It effectively turns the share market into something closer to a savings mechanism, where investors can build exposure to quality companies gradually instead of waiting for a large lump sum.”  

“The line between disciplined saving and impulsive trading can quickly blur. When investing lives on your phone it’s easy to make decisions in the moment.”  

Even more worryingly, recent Moneysmart search found that 63 per cent of Gen Z respondents said they use social media for financial advice and guidance, with 30 per cent using YouTube and 18 per cent using AI.   

Moreover, 56 per cent they somewhat or completely trust the information they receive on social media, with another 52 per cent trusting what they get from finfluencers. Most alarming is the fact that 64 per cent of those using AI trust it, concerning considering the fact that the technology is prone to hallucination.   

For a generation keen to access investing, professional advice is needed, especially in an increasingly complicated domestic and global market. As things stand though, if advice cannot become more accessible, Gen Z investors will continue to rely on alternative sources.