Influencers over experts: Why Gen Z’s investing decisions are falling short

7 April 2025, 13:55 | Updated: 7 April 2025, 15:19

By Wander Rutgers

Investing should be like Lego.

You start with the basic building blocks, cash ISAs, then stocks and shares, before considering riskier moves like crypto, FX trading, or even private market investment into startups. Right now, however, too many young investors are missing this first crucial step, or are skipping investments altogether. A lack of financial literacy is holding them back.

The Financial Conduct Authority (FCA) Chair highlighted this issue to the Treasury Select Committee just this month. He pointed out that financial literacy problems start in school. Many young people struggle with basic concepts like percentages and compound interest, and this lack of knowledge follows them into adulthood, shaping investment choices that could cost them in the long run.

The data backs this up. Research from the Global Financial Literacy Excellence Centre shows Gen Z has the lowest financial literacy of any generation, scoring just 43% on the P-Fin Index (a barometer to assess financial awareness). That’s a major red flag.

Meanwhile, financial institutions have not done enough to make investing easier to understand. The FCA Chair also called for “improved digital journeys” so investors can access the right financial products with confidence. Right now, Gen Z isn’t being met with enough clear, accessible pathways into traditional investing. Instead, they’re turning to the internet and social media for advice, which isn’t always sound.

Over the last five years, Google searches for “crypto” have trended at least 20 percentage points higher than “stocks and shares” in the UK. Online influencers, meanwhile, have surged in popularity, promoting different types of investments. Gen Z is much less likely to watch the Martin Lewis Money Show, and more likely to take advice from social media influencers. These influencers have a place, and many can promote healthy financial habits. But others have a darker side. 

A study in the Review of Accounting Studies, for example, found that though crypto influencers' tweets can move the market and deliver gains in the short term, these initial gains rarely hold over time and returns fluctuate significantly — a fact that influencers don’t often make clear to their audiences which follow their every move.

Influencers, and indeed alternative investments, have their place. Exciting and evolving markets can, and should, appeal to young, enthusiastic investors. But to build long-term financial security, Gen Z needs a solid foundation first. Understanding traditional investing, how to manage risk, how to think long-term, and how different assets perform over time is crucial. It sets them up for smarter decisions, whatever they choose to invest in.

So, how do we fix this?

First, better education. Not just in schools, but through broader public awareness campaigns, in which investment platforms have a duty to participate.

An FCA survey found that among people with £10,000 or more in cash but no financial advice, a third didn’t know inflation erodes savings over time. One in six mistakenly believed that cash ISAs and stocks and shares ISAs have performed about the same over the past decade, while nearly two-thirds didn’t know enough to have an opinion at all (link). That misunderstanding will create underinvestment.

When people’s financial futures are at stake, we need transparency, education, and better digital solutions. That leads us to our second solution. Investment platforms must step up and deliver this.

The financial services industry makes up a huge chunk of global GDP. But right now, it’s full of inefficiencies, unnecessary complexity, and opaque pricing. If investing were easy, everyone would do it.

That’s why the future of finance needs to be a place where simplicity and automation meet transparency, giving more people the chance to build wealth — not just the financially savvy few. It needs to be digitally driven, allowing Gen Z to buy stocks and shares with a touch of an app, and with clear, comprehensive information about past stock performance and potential returns.

Financial literacy isn’t just a talking point, it’s a responsibility. If banks, investment platforms, the FCA and even the Government want to see more Gen Z investors, we can’t just complain about the issue. We need to break down barriers, offer digital solutions that meet Gen Z where they are, and boost transparency across the board.

Wealth creation through investment shouldn’t be reserved for older generations. If we care about the financial future of young people, we need to act now and help young people create the building blocks they need to create a generation of successful investors.

________________

Wander Rutgers is UK CEO at Lightyear.

LBC Opinion provides a platform for diverse opinions on current affairs and matters of public interest.

The views expressed are those of the authors and do not necessarily reflect the official LBC position.

To contact us email views@lbc.co.uk