07 Apr 2021 4 min read

What do millennials mean for markets?


Millennials’ attitudes towards investing are changing. We believe this could have significant consequences, from the increased use of social media as a source of investment information to a stronger focus on responsible investments.



Millennials – those born between 1981 and 1996 and raised in the internet era – are by some measures the most risk-averse generation since the Great Depression. They tend to have higher levels of student debt and many started their careers around the 2008 global financial crisis, which taken together could explain their tentative approach to investing.

However, more accessible means of investing, online forums, and environmental, social and governance (ESG) strategies may be helping this generation of digital natives to shake off their initial caution around investing.

Peeking under the hood

The rise of investment apps has resulted in a surge of millennials investing. While they may have been wary of investing through traditional platforms, these trading apps have provided them with content specifically designed to help them start investing, including features that are often used in gaming.

In 2015, when its app launched, 80% of Robinhood’s customers belonged to the millennial demographic. Since then, lockdown restrictions have spurred on first-time investors, with Robinhood alone adding over three million new active users in 2020, most of whom are aged between 18 and 35.[1]

These trading platforms typically offer zero fees for trades, no minimum deposit, and ‘fractional shares’ – making investing in even the most expensive shares possible without much upfront capital. Instead they use methods such as the bid-offer spreads[2], selling premium accounts, and interest earned from uninvested cash[3] to make a profit. Their popularity, especially among new retail investors, has caused many brokerages to follow suit.

The millennial shift to trading apps has lowered barriers for retail investors and is opening markets to new savers. Regardless of whether these investors are seeking to chase the excitement of the past year’s volatility or are investing for the long term, it looks like investing using such platforms will remain a popular pastime even after lockdown.

With great power comes great responsibility

Millennials have driven the use of social media to gain knowledge from their peers and provide insights to others. The easily digestible and up-to-date financial information has made investing an accessible goal and interesting activity for many.

However, the Financial Conduct Authority warns that people should be wary of promises for ‘high-return investments’[4] as more people than ever are seeing such promotions on social media. The lack of content regulation means that individuals may take on too much risk with no one to hold accountable. Moreover, this can promote herding and the price of certain stocks may not reflect their true value. Exacerbating the risks, this speculative demand and increase in price would, initially at least, appear to validate the claims of those promoting it and work to their own benefit.

Have market trends worked in millennials’ favour?

Movements such as Extinction Rebellion, together with the global pandemic, have increased awareness of climate and social issues. Interest in ESG topics has grown across the board and is still closely linked to age, with studies suggesting 80% of millennial investors view ESG alignment as a priority. 

There was a record number of ESG fund launches in 2020 (505), with even more funds being repurposed to provide ESG solutions (250).[5] This has catered to the millennial desire for responsible investing.

Although millennials have been a major driver of demand for ESG options, older generations are clearly engaged too. A study conducted by LGIM[6] found that people prioritise the components of ESG differently depending on their gender, age and lived experiences. For example, women in the Baby Boomer generation may have been directly affected by social and governance factors, such as lower pay or contribution gaps from raising children, whereas millennials were the most likely to want their investments to reflect climate concerns.

Source: LGIM, “Finding the greenest generation: Our research into the ESG views of Boomer, Gen X and Millennial savers”, 2020

The financial industry is adapting quickly to accommodate ESG investing and better data are making it easier to identify, score and invest in these firms. With the US re-joining the Paris Climate Agreement, more assets will be eligible for ESG funds as over 1,000 firms have committed to set emissions reduction targets.[7] Additionally, MiFID II is expected to encourage more flows into sustainable funds as financial advisers must ask clients about their ESG preferences.[8] This should improve transparency around firms’ ESG scores, making it easier to provide solutions for the range of ESG priorities.

Changes in regulation, increased demand, and the resilience of these funds all point to an expanding ESG space. Whether or not ESG strategies will continue to weather financial market storms, only time will tell. As it stands, with more and more investors seeking to align their social and environmental values with the way they invest, the interest in ESG will likely carry on and we believe millennials will play a big part in driving this momentum.

Millennials have helped create more open markets, provided information to encourage others, and have taken steps towards advancing the ESG agenda. They have transformed themselves from the young and risk averse, to the young, empowered and influential. As we believe millennials’ involvement in financial markets will significantly increase over the next decades, we need to understand their thinking and how it could shape asset prices.


[1] https://www.thisismoney.co.uk/money/diyinvesting/article-8703693/The-rise-lockdown-share-trader.html

[2] https://moneytothemasses.com/saving-for-your-future/investing/trading-212-review

[3] https://robinhood.com/us/en/support/articles/how-robinhood-makes-money/

[4] https://www.fca.org.uk/publication/finalised-guidance/fg15-04.pdf

[5] https://www.morningstar.co.uk/uk/news/209301/which-funds-launched-in-january.aspx

[6] Legal and General Investment Management, 2020. Finding the Greenest Generation: Our research into the ESG views of Boomer, Gen X and Millennial Savers.

[7] https://www.wri.org/blog/2020/12/paris-agreement-progress-climate-action

[8] https://www.morningstar.co.uk/uk/news/209411/sustainable-funds-record-breaking-year.aspx


LGIM contributors