In the first article in our series, we took a closer look at the current financial attitudes and behaviours of millennials and Gen Z Malaysians. Based on findings from ICMR’s nationwide survey, we highlighted that the investment behaviours of young investors could be grouped into three categories linked to differences in their income, financial knowledge or confidence, and risk tolerance.
Beyond these individual differences, it is also important to understand how broader social trends and structural issues could shape investment preferences and behaviours. This includes media consumption trends, as young investors increasingly turn to digital sources of information, which could impact how they make financial and investment decisions.
Online Channels Are Preferred Sources
The Internet or online resources are the most popular source of information on investment products, reported by 69% of respondents in ICMR’s survey. Within this group, Facebook/Instagram (75%), websites/blogs (68%), and YouTube (65%) are the most frequented online platforms. The preference for online sources of information is particularly more prevalent among those under 30 years old.
These findings are unsurprising as the younger generations grew up during the Internet age and feel more comfortable conducting their online lives. Millennials generally led the adoption of new technology, and a McKinsey study in the Asia Pacific found that 50 to 60% of the primary influence in brand decisions for Gen Zs comes from social media and online sites.
But while online platforms like Instagram and YouTube provide an opportunity to reach out directly to millennials and Gen Zs, they do not always reach those who, ironically, may need this information the most. Although the Internet is abundant with resources catered for different levels of financial literacy, most of these resources still require users to seek out this information actively.
“I know there [are] a lot of videos out there, but I find most of it boring or too long. I tune out after a few minutes. I just want something easy to understand. It helps if I don’t have to seek it out actively.”
– Haris, 25, journalist
Confirmation Bias In New Social Networks
In contrast to other social platforms, TikTok delivers content to its users using a recommendation system. What users see on their TikTok feed is less determined by who they follow but curated by an algorithm based on their interests. Some respondents interviewed by ICMR mentioned they came across financial education videos on TikTok even without actively seeking financial information online.
Social networks that deploy recommendation systems thus provide a promising opportunity to reach target segments that do not actively seek out financial information. Nonetheless, these same segments might not have the right skills or knowledge to assess the trustworthiness of all the financial content they come across and determine the most suitable information for themselves.
For instance, the #fintok hashtag on TikTok (which has had more than 500 million views at the time of writing) includes everything from basic budgeting tips to advice on specific stock picks. Just as too little information can impact decision-making, too much information can lead to selective information filtering due to confirmation bias or the tendency to reinforce pre-held beliefs.
“I’ve never looked for financial information before, I don’t consider myself very financially literate. But I saw a TikTok video on money-saving tips and then slowly started watching more personal finance content there. My friends and I also started talking about property investments and passive income after watching it on TikTok.”
Farish, 30, Cafe manager
Increased Susceptibility To Financial Scams
Technology is a double-edged sword, especially regarding impacting financial behaviour. ICMR previously explored this in our report, Enhancing Financial Literacy in a Digital World: Global Lessons from Behavioural Insights and Implications for Malaysia. The report highlights how technological advances introduce new pitfalls for investors and open up potential avenues for fraud.
By applying behavioural concepts to financial decision-making, we can better understand how investors become susceptible to scams. Social preferences refer to the notion that community members’ and peers’ savings and investment decisions have a causal effect on individual decisions through social interactions or pressures for conformity, acceptability, and social identity.
Leveraging social preferences might help engage investors but can make them more susceptible to misinformation and herding behaviour. Herding behaviour is when people do what others do instead of using their information or making independent decisions. This could lead to individuals being involved in scams, misled, or creating investment bubbles.
For example, Malaysia’s Ombudsman for Financial Services (OFS) said in 2020 that the rise of financial scams is due to scammers using social engineering tactics to exploit victims’ financial insecurities during the pandemic. Since social networks provide access to a wealth of personal information, scammers use this data to target and manipulate consumers with higher vulnerability easily.
Developing Financial Literacy As The Way Forward
In today’s fast-paced and information-overloaded environment, it is becoming more important for young investors to improve their financial literacy proactively. The rise of non-traditional and unregulated sources of information means investors need to take ownership of their financial decisions with the right skills, knowledge, and tools to make better investments.
Fortunately, many online financial courses and training are available for individual capacity-building. Leveraging behavioural insights can also provide new ways to think about managing finances. Developing an awareness of their biases and how they can be exploited can help young investors build safer, more strategic long-term investing habits.
This article is part of a content series by the Institute for Capital Market Research (ICMR). Follow ICMR’s Facebook page to stay updated on behavioral tips and insights for better investing habits. To learn more about ICMR’s research on millennials and Gen Z, visit www.icmr.my or download the full report.
About the Authors
