More than 6 in 10 Americans feel they are in a better position to achieve their financial goals than the generations that came before them, according to the 2024 Schwab Modern Wealth Survey released this week.
The main reasons? The Schwab survey indicates Americans believe they have more ways to build wealth (50%), increased accessibility to investing (46%) and additional investment options available to them (46%). And younger generations are investing sooner than their older counterparts.
Among Gen Z in particular, the top reason for increased financial confidence is improved access to investing. This generation, which starts with those born in the late 1990s, began saving and investing when they turned 19 years old on average, nearly half the age of when Boomers started investing (35), according to Schwab’s data.
“There has never been a better time to be an investor, and it’s a very positive sign to see that more Americans than ever before are engaged with their personal finances and taking steps to build long-term wealth, in particular younger generations who are getting started with saving and investing earlier in their lives,” said Jonathan Craig, Head of Investor Services at Charles Schwab.
Being exposed to financial education is helping Gen Z put skin in the game at a younger age than previous generations. More than a quarter of Gen Z were taught about investing in school, significantly more than older generations.
Investing ‘more accessible’ today
Interestingly, the survey found optimism is most pronounced among Boomers, with 66% believing they are more or as likely as older generations to reach their goals. However, every generation surveyed showed a similar level of confidence when asked to compare themselves to previous generations—Gen X (63%), Millennials (62%) and Gen Z (60%).
One factor likely driving this positivity is a surge in the number of Americans investing in the stock market. Schwab’s survey shows that almost three in five Americans (58%) are investing today, in line with recent Federal Reserve data that shows the same proportion of American households that own stocks—either in mutual funds, retirement accounts, or as individual shares. The Federal Reserve data is up from 53% in 2019 and the highest on record.
“Industry changes like lower costs and minimums to invest and get advice, broader access to sophisticated platforms and tools, a proliferation of investing information such as research and educational content, and significant product innovations have all made investing more accessible than ever before,” Craig added.
‘Influencers’ lacking influence
When it comes to financial advice, Americans are more likely to engage with a professional financial advisor (59%) or family or friends (57%) than social media platforms (42%) according to Schwab’s survey.
In fact, most Americans don’t follow any social media influencers for financial advice (76%) and remain skeptical about social media’s effectiveness in making it easier to manage their money. Nearly two-thirds feel that social media has had no impact on managing their investments, and less than a quarter (24%) feel it has made it easier. Most grade social media platforms the lowest relative to other sources of financial advice.
Wider range of investment strategies
Across all generations, nearly 70% of Americans are confident in their investment strategy, and the availability of financial advice and knowledge (51%) and the ability to easily research companies and investments (37%) are cited as the top reasons.
“Investing is becoming a passion for an increasing number of Americans—they are more engaged than ever with their investments and are taking advantage of all the information and knowledge at their fingertips,” said Rob Williams, Managing Director of Financial Planning at Charles Schwab. “The result of this engagement and access to investing education and resources is a more sophisticated, more knowledgeable, and most importantly, more financially confident population of American investors.”
In addition to taking advantage of more widely available investment advice, educational resources, and investing tools, American investors today, particularly younger ones, are also exploring a wider range of investing strategies. Though buy and hold (56%) and growth investing (53%) are the most common approaches, Schwab’s survey shows Americans are also integrating more recent innovations in the investing space such as fractional share investing (37%), direct indexing (32%), socially responsible investing (31%), automated or robo-advisor investing (28%), and thematic investing (25%) into their strategies.
Get that plan in writing
One key area for improvement among Americans is financial planning. According to Schwab’s survey, only 36% of Americans have a written financial plan. Among those who do, three in four say it makes them feel more in control of their finances and nearly all (96%) say they feel confident that they will reach their financial goals.
Among those who don’t have a plan, most say it’s because they don’t have enough money (43%), it’s too complicated (25%) or they don’t have enough time (21%).
“Investing and financial planning are more accessible and more affordable today than ever before, and while we see that Americans are making great strides with their personal finances overall, there is still room for improvement when it comes to more formalized financial planning,” Williams said. “Once clients start the process, they realize a financial plan isn’t just a document to file away. Whether you get started with a do-it-yourself digital financial plan or in-depth conversation with a planning professional, financial plans today include interactive digital planning tools to help monitor progress and understand how changes in your life goals or circumstances can impact your plans.”
SEE ALSO:
• Gen Z Facing Obstacles to Retirement: Schwab Study
• 9 Key Findings from EBRI’s 2024 Retirement Confidence Survey
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
