Are Gen Z loyal investors? How to delight the new shareholder demographic

by | Jun 29, 2022

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By Kerry Leighton-Bailey , Director of Shareholder Engagement, Lumi

When you think of a typical shareholder, what image springs to mind? The male businessman, looking to maximise his portfolio to retire early? Once, this might have been true but this stereotype is changing fast.

The average age of a shareholder has dropped from 45 in 2012 to 37 last year, with 18% of all shareholders in the UK and US now aged between 18 and 24.

This new influx of Gen Z is set to become the ‘most disruptive’ generation ever as they demand more from the businesses they invest in. To successfully interact with this group, organisations need to be capable of answering one single question: what matters most to Gen Z?


Who are ‘Gen Z’?
Definitions of Gen Z vary, but generally include anyone born between the years 1997-2012. They are the first truly digital natives and don’t remember a time before broadband, mobile phones and social media.

However, when it comes to money, Gen Z are also decision makers and leaders. In fact, according to a Barkley study, 93% of parents stated that Gen Z influence household purchases. It has been estimated that Gen Z have a spending power of $323 billion. Despite Gen Z’s strong buying power and influence, a study commissioned by the Financial Times suggested that the generation do not feel as knowledgeable and confident as they would like to in the investing space.

They are hungry for knowledge but will often overlook traditional finance advisors in favour of ‘Fin-fluencers’, social media stars that focus on money related topics by sharing their own personal experiences on finance and investing. The danger of this practice is a growing wealth of misinformation. However, this leaves a gap for traditional financial services to share their knowledge by using non-traditional forms of communication like TikTok and Instagram.


What do Gen Z investors care about?

Gen Z consumes more content about social and economic equity than any other age group, whetherthrough news articles, blogs, or videos. As the generation has grown up with online activism, making an impact on wider society is a key priority for Gen Z along with raising awareness for issues on a global scale.

The internet has played a crucial role in helping Gen Z educate themselves on important topics such as ESG (environmental, social and governance) and taught them to become more globalised individuals.


This means Gen Z investors are often interested in more than just a profit. Four fifths of the demographic say they factor ESG issues into their financial decision-making. Meanwhile, 84% of UK Gen Z investors and 82% in the US say they have been frustrated when a company whose shares they own behaves in a way they consider ‘unethical’.

How can businesses engage Gen Z investors?

Holding the attention of Gen Z is perhaps the mightiest of hurdles when approaching shareholder relationships; however, this is easier than it seems.


Think digital

Gen Z are digital natives with social media and smartphones fully integrated into their lives. This means that companies must also ‘think digitally’ when engaging with them. One of the ways this can be achieved is through digitalising annual general meetings (AGMs), the most important shareholder meeting of the year.

This is key to engaging the demographic. Virtual and hybrid meetings have not merely enabled a way to replicate in-person events during the pandemic – they have marked the starting point of a fundamental shift in how investors can interact with companies, one that is no longer a knee jerk reaction to extraordinary circumstances.


Lumi’s data shows there was a 70% increase in the average number of attendees attending AGMs last year compared to 2020. Therefore, this format is not only beneficial for Gen Z investors, but also shareholders as a whole as it increases quality of participation.

Engage all year round

To meet the new demands of an engaged shareholder group and the questions they have all year round, companies must think beyond the AGM and continue to invest in investor relations (IR) events. Inviting directors to make regular contact with Gen Z shareholders can also improve voting outcomes, increasing transparency and fostering a sense of personal connection with board members.


IR days can also help maintain a loyal Gen Z shareholder base and perceptions of value, as they provide the opportunity to share updates on the direction of the company. Although Gen Z investors may rely more on social media and ‘Fin-fluencers’ to judge whether an investment is worthwhile, an investor day allows your organisation to take back control and tell your company’s story using a more positive lens.

Communicating the good and the bad

Gen Z value authenticity, meaning they need to know the whole picture – the good and the bad – especially when it comes to ESG issues. If they feel they’re being greenwashed or condescended to, they will switch off and find their own information from other sources. This practice could reduce trust, creating anger that leads to activism – which ultimately might mean crucial messages discussed through healthy debate are drowned out.

By acknowledging the challenges alongside the opportunities, organisations can forge trust amongst young investors through transparency. This is a crucial part of any successful stakeholder communications strategy, particularly amongst Gen Z who look for hard data and evidence. Therefore, businesses must meet the demands of Gen Z investors, as the potential impact of this young generation in the investment world is not yet fully known.

Engaging the next generation of investors is no easy task; however, both businesses and financial advisors must find innovative ways to capture the attention of Gen Z. Thinking digitally, communicating any ESG triumphs and engaging younger investors all year round are just some of the ways to ensure businesses encourage loyalty in this new generation.

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