Kuala Lumpur, 1 November 2021 – The Institute for Capital Market Research (ICMR) Malaysia today launched its latest research report on “The Rise of Millennial and Gen Z Investors: Trends, Opportunities, and Challenges for Malaysia.” The research attempts to understand financial attitudes and behaviours of millennials and Gen Z investors, the largest generational cohorts with the power to influence consumer and market trends over the next decade. This report presents findings from ICMR’s nationwide quantitative survey of 1500 respondents and supplementary qualitative interviews.
ICMR’s survey found that respondents aged 21-40 years old could be divided into three mutually exclusive groups. Group A comprises those who do not invest in any capital market products (22%); Group B invests only in Amanah Saham Nasional Berhad (ASNB) funds and/or unit trusts (33%); and Group C invests in capital market products not limited to ASNB and unit trusts (45%).
The report notes that there are distinct demographic and behavioural differences between these three groups. In terms of geographical differences, Group A had a higher proportion of respondents from the East Coast, compared to Group C which had a higher proportion of respondents from the Central region. A gradual shift in the bell curve of household income levels was also witnessed whereby 69% of Group A earn less than RM5,000 in monthly household income, while there is a skew in Group C towards higher incomes, with 31% having household incomes above RM10,000.
In terms of self-assessed financial literacy knowledge between the three groups, only 9% of Group A felt that they are quite knowledgeable about investing, compared to 23% in Group B and 48% in Group C. Self-assessed financial literacy knowledge is an indicator of one’s self-confidence when it comes to financial matters.
A behavioural difference in the self-assessed risk tolerance of respondents was also observed between the three groups, as only 26% of respondents in Group A identified themselves as risk takers, compared to 39% in Group B and 57% in Group C. These findings suggest that there is a link between the likelihood of one investing, the kind of product one invests in, and ones’ demographics and behaviour.
Research findings on the three groups highlight there is a plethora of factors linked to investment behaviour, including income level, actual and perceived financial literacy, financial confidence, and risk tolerance. This indicates that a one-size-fits-all policy may be ineffective, as it does not address the nuanced behaviour and attitudes seen across the three groups.
ICMR’s study also presents findings about the perception of millennials and Gen Zs on broader emerging consumer trends. In terms of preferred sources of information, the most popular source was internet / online sources (69%), while the second most popular was friends and family (58%). This suggests how trust and relatability are key in how investors make financial decisions.
Given the intersectionality between the various factors that influence an individual’s behaviour, as well as the emerging trends that tend to influence society and generational cohorts at a broader level, ICMR concludes its report with several key considerations for policymakers and agencies tasked with financial literacy and retail investor initiatives as well as industry players.
The considerations call for a nuanced and tiered approach in policy for investors in different life stages, a renewed mandate for financial literacy that incorporates the right tools, self-awareness and techniques, behavioural approaches and design for policy and products, and acknowledging the underlying structural challenges that cannot be solved by market-based solutions.
Tan Sri Munir Majid, Chairman of ICMR, commented: “Achieving the delicate balance between investor protection and investor empowerment requires a tiered approach to policy and products. Policy and products need to cater for individuals at different stages of readiness, and this is defined by individual life stages as opposed to the broad categorisations of age and income.”
To learn more about ICMR’s research, please download the full report and summary at https://www.icmr.my/the-rise-of-millennial-and-gen-z-investors-trends-opportunities-and challenges-for-malaysia/
