U.S. Bank: Gen Z Prioritizes Values in Investment Choices but Struggles to Start

A new survey conducted by U.S. Bank has shed light on the investment behaviors and attitudes of Generation Z (Gen Z), revealing a generation driven by values but overwhelmed by the complexities of investing. The survey, conducted between May 12-24, 2023, included 3,000 active investors and 1,000 aspiring investors across various generations.

38% of Gen Z active investors define wealth as having a better quality of life. 65% of active Gen Z investors want to invest in causes they care about, with 85% willing to accept a return significantly less than the average return of the S&P 500. This willingness to sacrifice returns for values sets Gen Z apart from older generations.

Investors have been significantly affected by the current economic climate, with 34% expressing greater pessimism about their investments' future compared to the previous year. In response to recent economic developments such as inflation, escalating interest rates, and soaring costs, 79% have altered their investment strategies within the last three months. Illustrating the broader economic challenges, since 1980, there has been a 169% increase in college tuition, a 540% rise in the average home price, and the average student-loan debt has reached $37,000.

Social media's influence on young investors is notable, with more than 75% believing that social media makes investing look easy. Yet, 73% of Gen Z and 70% of Millennial investors are unsure where or how to begin investing. This paradox highlights the gap between perception and reality in the world of investment for younger generations.

Trust in financial advisors is higher among Gen Zers, with 62% trusting them more than any other generation. 50% seek financial advice from family, and 36% from YouTube. The survey also revealed that only 6% of all Gen Z investors do not compare their wealth and investment goals to others, contrasting with 26% of Gen X and 40% of Boomers.

Gunjan Kedia, vice chair of Wealth, Corporate, Commercial and Institutional Banking at U.S. Bank, stated, "It’s no wonder they are unsure about beginning an investing journey. But despite these headwinds, they are passionate about investing in causes they believe in and are seeking financial guidance."

The findings of the survey emphasize the need for tailored financial guidance for younger generations, who are navigating a unique economic landscape.