PARIS, Dec. 14, 2023 (GLOBE NEWSWIRE) -- More than 80 percent of members of Gen Z who are actively investing would trust robo-advisors and digital tools with at least a portion of their investment portfolio. That’s according to new research by asset management strategy advisor Indefi, which examined the investment preferences of 1,500 Europeans aged 18-25, half of whom are currently investing and half of whom may be interested in doing so in the future.
According to the study, entitled “Gen C (Customization): Unraveling the Gen Z Investment Equation,” Gen Z individuals place significant trust in digital investment options, especially if they are already putting their money in the markets. Of those who are current investors, nearly 15 percent said they would be willing to allocate all of their assets via a robo-advisor or another digital tool, with another 66 percent saying they would trust these technologies with part of their portfolio, while just 7 percent said they want a real person to advise them. Among prospective investors, 5 percent said they would trust a robo-advisor or digital tool to allocate their entire portfolio, and more than half (57 percent) would trust these technologies with a portion of their portfolio.
Female respondents were additionally almost 10 percent more likely to say they would want a personal consultation with a financial advisor than male respondents.
Customization and Digital Tools: The New Standard
Personalized investment solutions are highly attractive to Gen Z, according to Indefi’s study. Ninety-four percent of respondents stated that personalization is an important or essential feature when making investment decisions, with about half of those saying they want to be in full control over the underlying assets in their portfolio.
Within customization, sustainability preferences play a role, with over 90 percent of participants willing to consider impact or ESG issues in the assessment of their portfolio composition.
The study also found that digital tools are important to Gen Z, in terms of user experience, functionality, and investing features. Respondents ranked full mobile access to their investments, including complete trading capability, as the most important functionality when investing online.
Participating Gen Z Europeans were also highly fee-conscious, ranking zero commissions as the most important feature when investing online, regardless of gender or whether they are currently investing.
“The new generation of investors are digital natives. They want to be in control of their own destiny when it comes to their investments, but they still look for support from the platforms they invest with,” said Narek Makaryan, Senior Consultant at Indefi. “This requires a rethink from the asset manager’s perspective – what sort of new services, tools and products can you provide that facilitate access to investors that prioritize doing it themselves?”
A Generation of Risk Takers
The study’s Gen Z individuals expressed a willingness to allocate a significant portion of their portfolio to high-risk investments: more than one-third (37 percent) of total respondents said they were willing to allocate more than half of their portfolio to high-risk assets. Even given the high allocations to risky assets, 58 percent of respondents characterized their risk tolerance as moderate vs. 18 percent for high, representing potential new perceptions on what is considered a risky profile. Gen Z women were also 11 percent more likely than Gen Z men to say they have a low risk tolerance.
In addition, 58 percent of study participants expressed a primary investment time horizon of less than three years, marking a contrast between traditional investment thinking on the balance between risk and time horizon.
“A limited time horizon with high desire for risk is an atypical investor profile,” said Jenny Holmgren, Engagement Manager at Indefi, “However, the growth of a generation who is short-term and ‘risk-on’ presents opportunities for asset managers to provide access to investments that could cater to these preferences more effectively than vanilla, indexed asset management products.”
When asked what information they would need before making an investment decision, respondents ranked in-depth research around potential risks above all other choices. Among respondents who said personalization was important when making investment decisions, risk tolerance ranked as the most important personalization parameter, tied with products curated by investment goal.
Methodology
The online study was conducted by Indefi over a two-month span (May-June 2023), with questions distributed to a target population aged 18-25 in select European countries, chosen based on their economic and asset management market significance, including the UK, Germany, France, Italy, and Spain. No monetary incentives were offered for survey completion. The sampling error is +/- 3 percentage points at the 95 percent confidence level.
About Indefi
Indefi is a strategy consulting firm that provides asset managers– from the top 10 largest global firms to boutique and private market specialists– with an actionable roadmap to achieve their growth objectives. Operating across Europe and the U.S., Indefi maintains both a global view and deep local market expertise. The firm’s guidance, grounded in conviction and insight, spans growth strategy, market entry, product development and enhancement, sustainability, and M&A support. For more information, please visit www.indefi.com.
Media Contact
Sarah Lazarus
Dukas Linden Public Relations
M: +1 617-335-7823
sarah@dlpr.com
