First published in the Daily Maverick 168 weekly newspaper.

Zillennials, or older Gen Zs born between 1994 and 2000, are a socially “woke” group who are more likely to invest in environmentally friendly investments and are comfortable with the digital age of investing.

According to the Credit Suisse 2021 global investment returns yearbook, this generation will suffer from the economic fallout of the Covid-19 pandemic as well as an inherited climate crisis. Closer to home, Zillennials appear to be less focused on saving for retirement, more focused on short-term and medium-term goals, and eager to engage with their money digitally.

Gontse Tsatsi, head of retail client management at Old Mutual Investment Group, says OMIG is seeing more investment by this generation into ESG (environmental, social, governance) funds and the Shari’ah fund range. 69% of those aged between 18 and 30 would consider moving their investments to ESG solutions, where available, and 42% would definitely move their investments. He says this affinity for responsible choices is not limited to investments, noting that this generation is a big believer in responsible living.

Nomi Bodlani, head of strategic markets at Allan Gray, agrees.

“Zillennials are a very ‘woke’ generation and that is an important lifestyle ideal in this particular group. They believe they are more socially conscious than the generations that went before them. Research from the UCT Unilever Institute reflects that at least 6% think their parents aren’t socially conscious. They are quite tough on what it means to be socially conscious, and how that translates into investments is that they are more likely to be interested in not only their returns but the socially environmental implications of their investment choices,” she says.

Bodlani hastens to add that ESG has become important across generations in the last decade, but Zillennials are likely to place higher importance on this when making investment or life choices.

Tsatsi says that almost two-thirds or 62% of Zillennials are investing towards their retirement independence. “This number is lower than the 30- to 49-year-olds (76%) and 50- to 60-year-olds (78%). However, it is reasonable considering that they are just starting out their working lives and retirement is not yet top of mind.”  

He adds that Zillennials are a lot less structured than previous generations when it comes to investing.

They tend to save for specific short- to medium-term goals such as holidays and entrepreneurship seed money.

Bodlani agrees. “There is a huge disconnect between youth today and their 60-year-old [selves] in terms of saving for retirement. When you think about your future self, your brain activity is the same as when you think about a stranger.”

This is not “wrong”, provided you remain aware of the overall cost in compound growth. “The longer you take to start investing for retirement, the higher the monthly amount needed to invest.”

Duma Mxenge, business development manager at Satrix, says there is a global trend of Zillennials saving towards retirement, but the numbers are not as high in the South African market. “As an industry, we need to do more to educate young investors … about the benefits of early retirement planning and savings,” he says.

Mxenge notes that direct access to investment solutions providers such as Satrix and Easy Equities has made Zillennials less reliant on financial advisers. “The buy-ins are often small amounts; for example, with Satrix, you can invest from as little as R10, and the fees are low, so it encourages them to own their financial journey instead of relying on financial advisers,” he says.

“As digital natives, Zillennials are more conscious of financial responsibility. Previous generations tended to repeat their parents’ financial habits, [but Zillennials] are more exposed to information and therefore more conscious about their money. We see this in the rising trends on social media such as FinTwitter, where people easily talk about their investments, share tips, and engage with financial services brands,” he says.

Tsatsi says 58% of Zillennials prefer to deal directly with a financial services provider, 31% will consult a financial adviser on complex issues, and only 11% deal with a financial adviser on all their investment needs.

“The rise of digital has made access to investment information easier. Almost [two-thirds] (62%) indicated they prefer to consume their information digitally, with only 4% saying they are averse to technology. Our research shows that they are typically looking for flexibility in savings (58%), the knowledge that their investments are safe and will deliver investment performance (38%), and choice (27%). They also indicated their preferred format is video, with close to 60% watching YouTube once a week or more. Other top social media platforms are Facebook, LinkedIn, Instagram, and Twitter,” he says. DM168

To be ‘woke’?

Officially added to the Oxford dictionary as recently as 2017, the term “woke” refers to someone who is alert to racial or social discrimination and injustice. Urban Dictionary added the word “woke” two years before and defines it as “being aware… knowing what’s going on in the community (related to racism and social injustice)”.

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.