Generation Z retail shareholders—those between 18 and 24 years of age—are emerging as some of the most influential investors in the markets.
A new survey and report from Equiniti, Shareholder Voice 2021: Grasping the Retail Investor Opportunity, reveals that 18% of all retail shareholders in the UK and US are Generation Z. They are active and interested in more than just a profit: a total of 89% in both the US and UK either vote intend to vote at AGMs. This, Equiniti’s report suggests, means Gen Z shareholders may consider themselves long-term investors.
Meanwhile, 80% of Gen Z investors say they factor ESG (environmental, social and governance) issues into their financial decision-making.
Ethics are on their minds too: 85% 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”.
Gen Z investors are also interested in IPOs, with 70% saying they would invest at flotation.
Gen Z investors: more diverse, more vocal
The growing importance of Gen Z investors should give executives food for thought, according to Sheryl Cuisia, managing director and founder of Boudicca (an Equiniti company) and incoming chair of the UK Individual Shareholder Society.
She says online trading platforms and the rise of cryptocurrency has made it easier for “younger generations” to become involved in investing. Shareholding is also becoming more diverse, with more women involved, a factor changing the perception of UK retail investing.
“Individual shareholders have much to contribute to companies and society. Because they are singular, they struggle to be heard. But companies are realising there are millions of them and will collaborate more,” said Cuisia.
Gen Z’s interest in ESG factors means companies need to consider delivering more and better information, according to Paul Matthews, chief executive of EQ Boardroom at Equiniti.
“Retail investors,” he said, “can have a disproportionate effect in voicing displeasure as they become more sophisticated about ESG and other fundamentals.”
There is also an ESG communication challenge, according to Richard Davies, managing director at RD:IR, Equiniti’s investor relations specialist in the UK.
“Shareholders have become much more vocal on ESG because of issues such as the way companies treated their employees during the pandemic, and re-emerging climate change awareness,” said Davies. He added that companies should pay attention to the ESG agenda and the way retail investors could vote because “good communication on ESG can boost shareholder engagement”.