Why Social Trading Matters to Generation Z
The retail investing market has evolved and shifted away from traditional face-to-face financial advice. More and more investors are now embracing online trading platforms like Robinhood, eToro, and TradeRepublic, marking a transition to a faster and more digital world. Everyday investors are turning to social platforms such as Twitter, YouTube, Instagram, and TikTok for peer-to-peer investment advice. And that’s not to mention the very active communities on platforms like Reddit and Discord, where investors share detailed insights about their market predictions and activities.
The rise of more diversified financial knowledge, however, is not without its faults. Meme stocks (those that gain popularity among retail investors through social media) are unpredictable and volatile. Experiences of jumping on bandwagons and losing money quickly are all too familiar to some.
Despite the plethora of information, finding a trustworthy source remains challenging. The era of promising overnight wealth with vague stock recommendations is losing credibility. There needs to be legitimacy in the space. This can take form in social trading products (like the ones we at StockRepublic build!). Social trading apps are a legitimate form of sharing financial knowledge and shouldn’t get a bad reputation.
Generation Z (those born between 1997 and 2012) knows this. They are technology obsessed, digitally native, socially conscious, independent, and financially motivated. They take their finances seriously and a majority of them rely on multiple sources, including social platforms, to make investment decisions.
Social trading apps allow customers to get the best possible real-time benchmark, guidance, and inspiration for investing. Investors can compare their returns to those of their peers, learn from top investor strategies, and share their own gains (or losses). These factors instill confidence and empower investors to make informed financial choices.
Gen Z's inclination towards social trading is already apparent, as illustrated by a breakdown in one of our client’s user base. Specifically, when comparing the bank’s core user base to the user base of its social trading app (built by StockRepublic), there was a +235% increase in Gen Z users.
Still, social trading as a powerful financial instrument is one that remains underutilized by many banks and brokers. As we navigate the evolving landscape of finance, embracing the potential of social trading is a key step toward democratizing access to financial insights and fostering a more informed, empowered generation of investors.
