As Gen Z invests online, fraud is no longer just a problem for seniors

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Most Canadians under 25 use social media tools such as YouTube and TikTok regularly, and more of them are being exposed to information about investments on those platforms, according to the Canadian Securities Administrators’ (CSA) 2024 Investor Index study.
Ascertaining what’s fact versus fiction can be a struggle for Generation Z investors, says Marissa Sollows, chair of the CSA’s investor education committee and director of communications and public affairs at the Financial and Consumer Services Commission in Saint John.
Ms. Sollows spoke with Globe Advisor about the CSA’s study and investing trends for the 18 to 24 age group.
How do young investors differentiate between an advisor and a finfluencer?
They use both as sources for their investing knowledge but they don’t always differentiate. We found a growth in investing activity from those aged 18 to 24. They own things such as securities and exchange-traded funds. There’s a lot of interest in the crypto sphere. But we see a low number of people vetting and checking the licences and registrations of the people from whom they’re getting their information. The CSA tries to reinforce the importance of using qualified sources of information. For example, on our website, we have a list of the crypto-asset trading platforms that are registered and the ones that are banned. So, if they’re not on that registered list, don’t give them your money. Investors need to make sure they know who the person is and to check their background.
Your survey found an increase in investment fraud affecting young investors – from 0.4 per cent in 2020 to 5 per cent today. Was this a surprise given the tech savviness of this generation?
Not really. The fraud pitches have become sophisticated, so they’re tailored to whatever person they’re reaching. It’s no longer just targeting seniors. The 18 to 24 group generally fall into the lower investment knowledge scores on our index and has lower income or investment portfolio amounts. They may have higher confidence but not higher knowledge or experience to match it. And, in some cases, they’re looking for opportunities to make some quick money to deal with some of the other economic challenges they may be having. We call them ‘accidental investors.’ They come across an opportunity online, and they’re looking for a way to make some money to help themselves out financially but then get pulled into what ultimately ends up being a scam.
What do you make of the fact fewer investors are using advisors, at 61 per cent, down 8 percentage points from 2020?
It’s not entirely a doom-and-gloom scenario. When we look at the data, there wasn’t a lack of desire to work with a financial advisor. It was more about their portfolio size or they felt their needs weren’t as complex to warrant using an advisor. They may want to work with an advisor in the future. They’re just waiting until their portfolio grows or they have more assets.
This interview has been edited and condensed.
– Deanne Gage, Globe Advisor reporter
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