In an attempt to support growth in retail investing, the World Economic Forum recently partnered with BNY Mellon and Accenture to survey what leads people to participate – or not – in capital markets. The 95-page report includes this sad finding:
– Gaps in financial education are the primary barrier to investing: In France, Germany, the UK and US, retail investors feel they have a comparatively better understanding of newer, less established products (e.g. cryptocurrency and non-fungible tokens or NFTs) compared to more traditional asset classes (e.g. bonds and stocks).
Diving deeper, nearly 40% of investors said they don’t understand stocks or bonds. Another 18-24% said they don’t know where to access these products! Meanwhile, 40% of global retail investors hold crypto, and Bitcoin is making its way into retirement portfolios.
Having spent my entire career to-date in the public company and capital markets space, being the type of person who mostly just holds boring old index funds, and having just written a blog about complicated regulatory questions & uncertainties surrounding digital assets, this news fills me with both dismay and FOMO. Maybe what stocks need is a spokesperson who is younger than 90 (no offense, Warren & Charlie). According to the survey, 70% of retail investors are under 45 years of age.
Despite crypto’s rise, we’re nowhere near an inflection point. This Reuters article says that the value of the global equity & bond markets still dwarf crypto – $124.4 trillion and $126.9 trillion in 2021, respectively, compared to $3 trillion for crypto (and that’s before the 2022 slide). The survey details how this class of “investments” (?) comes with its own challenges…
– Liz Dunshee