Generation Share is not just investing in the market; they're reshaping it. Uncover the distinctive behaviors of Gen Y and Z investors and why they should be your focus in the evolving IR landscape.
The world of investor relations (IR) is evolving—and with it, comes the need for professionals in the industry to adapt and innovate in their strategies for investor communication.
Today, it's not just about reaching traditional investors; it's about tapping into the potential of the next generation of investors.
Welcome to the era of Generation "Share"—a target market comprising of investors in Generation Y and Z.
Who is Generation "Share"?
Generation "Share" is a term coined to represent a blend of the Generation Y and Z demographic.
As per Julia Stoetzel's interpretation in Junicorn’s eLearning Module 2-6, Generation Y encompasses those born between 1981 and 1996, while Generation Z refers to those born thereafter, all the way up to the present day. These are individuals who are digital natives, mobile-first, have shorter attention spans, and are actively taking care of their own wealth-building.
These individuals form a significant demographic, making up 25% of the German population—a statistic that may be replicated in other developed nations. Despite being younger, they are not to be dismissed as non-shareholders.
In fact, many of those in Generation “Share” are already actively investing, with those above 18 possessing disposable income to engage in wealth-building activities, including stock purchases.
The Importance of Broadening Communication Strategies
The investor landscape is changing rapidly, and it's crucial for IR professionals to acknowledge this shift and broaden their communication strategies to effectively reach out to younger investors. From Stoetzel's perspective, these potential shareholders are eager to learn about wealth building and are actively investing in various asset classes, including stocks.
Traditional approaches to investor communication may not resonate with this demographic. This is a generation that values diversity, seeks sustainability, and is heavily reliant on digital platforms—and they are primed to absorb information that is readily available, succinct, and engaging.
Let's delve into the five most striking takeaways from Modules 2-5 and 2-6 of Junicorn’s eLearning Course:
1. Generation Share is Actively Investing for Long-Term Wealth Building
Contrary to popular belief, younger generations aren't just spending—they are investing.
Stoetzel shares, "65% of generation share bought shares for long term wealth building and 82% bought ETFs." These two statistics shed light on the fact that investors in Generation Share are investing for their future, and they view stocks and ETFs as vehicles to achieve their long-term financial goals.
Newer developments continue to arise thanks to the growing presence of Generation Share in the investment markets—which means that IR professionals need to take note and adjust accordingly. Stoetzel relays the specifics of where this wave of younger investors is flocking towards, saying: "There's really a shift versus other asset classes, towards shares and ETFs which are giving higher returns over a very long period of time than, for example, fixed income bonds, government bonds, saving accounts."
2. They Are Digital Natives and Mobile-First
Generation Share is at ease with technology, and this reflects in their investment habits. They leverage new-age brokers and digital platforms for their investment needs. As Stoetzel points out, "37% of generation share so people below 35 are buying shares and ETFs via new brokers."
As a result of an upbringing in a digital age, this younger generation of investors exhibit unique habits in their investment habits—a key detail Stoetzel observes: "So that means that people are really buying stocks on the go. It could be a very short process, right? They're maybe seeing an influencer posting something on social media and then with two clicks on a neo broker you can buy these stocks very rapidly."
3. Short Attention Span Favours Multimedia Content
Stoetzel underscores that Generation Share has a short attention span and prefers engaging content, specifically multimedia. She adds, "the majority of generation share values multimedia approaches including graphics and videos specifically comparing to the older generations."
"In general they are much more valuable multimedia-prepared documents. There are other traits that they do value, you can also see that here in this graph but it definitely shows a distinction between older generations and the younger generation that multimedia."
4. ESG Is a Hygiene Factor, Not a Decision-Making Tool
One might assume that the younger generation, known for its passion for sustainability and diversity, would make investment decisions based on ESG factors. However, Stoetzel's findings challenge this assumption. She notes, "the study actually found that ESG is not necessarily a very important tool or component of the decision-making process to buy a stock or not."
She further adds, "it says that it's probably more considered a hygiene factor. So the generation definitely values sustainability but when making a stock decision, it is actually ranking amongst the lower traits of criteria that are influencing a decision to buy a stock or not."
5. Generation Share Favors Companies with Clear Communication and Transparency
Another key takeaway from the conversation is the importance of clear communication and transparency for Generation Share. They value companies that are honest, open, and clear in their communication about their financial health, plans, and outlook.
Stoetzel reiterates this point, saying: “The next generation of investors is actually taking investment decisions specifically upon the presence of ESG and sustainability and diversity. the study actually found that ESG is not necessarily a very important tool or component of the decision-making process to buy a stock or not."
In short? A company that communicates its strategy effectively is more likely to attract these investors.
These two Junicorn eLearning modules—and the entirety of the curriculum—are a must-watch for IR graduates, IR professionals, management executives, and communication specialists. It provides valuable insights into the mindset of the next generation of investors. Understanding their preferences and adapting communication strategies accordingly will not just attract these investors, but also retain them in the long run.
In this era of Generation Share, it's clear that those who adapt will thrive, and those who don't risk falling behind. The future of investor relations is here, and it's time to embrace it.