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The Hitchhiker’s Guide to the #GenerationY Investors

10 April 2017
– 4 Minute Read


By Jared Lesar and John Loubser, candidate attorneys, Bowmans South Africa

Hashtags, apps and status updates – welcome to the world of Generation Y. Masters of everything hip and high-tech, Generation Y-ers (commonly understood to consist of those born between 1980 and 2000) are, according to an article in Time Magazine, sometimes labelled as lazy, entitled, selfish, shallow and fame-obsessed. Ask any Generation Y-er about these stereotypes though and the likely response (distributed across a multiplicity of social media) would be something like, ‘nobody understands us’ – and they would probably be right.

But what about the typical Generation Y-er’s attitude towards money and investing? For financial advisers, taking the time to learn what influences a Generation Y-er’s financial decision-making and understanding how to engage with young investors is key to tapping into this strategic market segment. It is therefore crucial to understand what characterizes Generation Y, and more importantly, how to appeal to the next generation of investors.

Generation Y

While grouping individuals born across two decades and in extremely varied socio-economic circumstances is problematic, certain economic and political issues unify Generation Y. Generation Y-ers will have grown up during the rise of the Internet, increased consciousness of climate change, geo-political instability following global events like 9/11, and many Generation Y-ers will have left school to face the continuing effects of the 2008 recession on the job market. Further still, South African Generation Y-ers must confront the lingering socio-economic effects of apartheid.

Unsurprisingly, these factors affect the financial decision-making of Generation Y-ers. A study by UBS Investor Watch, Analysing investor sentiment and behavior Q1 2014, found that as a result of experiencing the financial crisis early in their careers, Generation Y-ers are highly conservative regarding risk compared to other generations.  Moreover, having witnessed the impact of the 2008 recession on their parents’ long-term investments, as well as the culture of instant gratification that characterizes the Digital Age, Generation Y-ers are typically skeptical of long-term investing as a means of achieving financial success. Generation Y-ers are also more likely to delay important life milestones like starting a family and purchasing a home compared to their parents.

The UBS Investor Watch study notes that the advent of the Internet has also affected how Generation Y-ers make financial decisions, though not in the ways you might think. Although Generation Y-ers have digital access to more information than ever before, they tend to look to their spouse, friends and parents for key financial advice more than any other generation and will then make decisions based on input from multiple sources.

Becoming A Hip Financial Adviser

Generation Y-ers are more comfortable than other generations with mobile technology and transacting online and financial advisers will need to engage with younger investors on their terms. According to an article on, more than half of Generation Y-ers would prefer a ‘hands-off’ or low-touch engagement with advisers, and email and phone calls together are the preferred methods of communication for millennial investors. In the near future, online automated investment advisor platforms, or ‘robo-advisors’, designed to generate customized investment plans based on parameters provided by investors, will likely become increasingly popular among younger investors, who typically look for a low-cost, real-time and transparent service.

However, while inventive technological solutions catered to young investors’ needs can give financial advisers the competitive edge, Generation Y investors, like their elder counterparts, still seek a personal experience and service. Advisor experience and transparency matters, and, as stated in Jefferson National’s 2016 Advisor Authority – Special Report: 2016 Generational Data Book, the goal for financial advisers should be to provide a service consisting of innovative digital solutions combined with holistic, unbiased, and guided advice.

Surveys and studies aside, financial advisers should be mindful that, perhaps more so than any other generation, Generation Y-ers yearn to be treated as individuals, each having their own unique inspirations and aspirations. Take the time to validate your assumptions about Generation Y investors and engage with them continuously about their ever-changing financial needs. Connect with them instead of simply selling a product.

Doing so will allow you to establish valuable long-term relationships with young investors, and crucially, might just help you avoid being among those who simply ‘don’t understand us’.