Enhancing Investor Knowledge

SEC Investor Advisory Committee

Meeting of December 7, 2023

Gerri Walsh, SVP, FINRA & President, FINRA Foundation

December 7, 2023

© 2023 FINRA Investor Education Foundation
AGENDA

01 About Us

02 Research on Investors

03 What Works in Financial Education

04 What’s Next

05 Resources

© 2023 FINRA Investor Education Foundation 1
About Us

© 2023 FINRA Investor Education Foundation 2
Research on Investors

© 2023 FINRA Investor Education Foundation 3
Recent Data Collections

2020 2021 2022 2022 2022 2024

2020 New Accounts

With NORC, examined 

people who opened new 

taxable investment 

accounts in 2020

2021 NFCS Investor 

Study

Survey of 2,824 U.S. 

adults who have 

investments outside of 

retirement accounts

2020 Revisited

With NORC, re-examined 

480 of the 2020 New 

Investors (longitudinal)

Gen Z Investors

With CFA Institute, 

surveyed 2,872 people 

aged 18–25 in 4 

countries

2022 New Investors

With NORC, examined people 

who opened taxable accounts 

for the first time in 2021–22 plus 

those who opened only crypto 

accounts

2024 NFCS 

Investor Study

Survey construction 

under consideration; 

will be launched 

summer 2024

© 2023 FINRA Investor Education Foundation 4
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22% 40% 6% 23%

New Investors 

Ages 18-29

New Investors

Ages 30-44

Holdover 

Account Owners

Ages 18-29

Holdover 

Account Owners

Ages 30-44

What We Know About Newer Investors

© 2023 FINRA Investor Education Foundation

They were younger in 2020 ...

... a trend that continued in 2021 and 2022
2022 New Investors (Securities)

o More diverse

o Top 3 Goals include: 

o Saving for retirement (56%)

o Learn about investing (29%)

o Speculating (24%)

o Info sources:

o Friends & family (34%)

o Other personal research (30%)

o Financial professionals (29%)

2022 New Crypto-only Investors

o Even younger

o Top 3 goals include:

o Learn about investing (39%)

o Speculating (29%)

o Saving for retirement (25%)

o Info sources:

o Friends & family (48%) 

o Social media (25%)

o Other personal research (25%)

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What Else We Know About Newer Investors

© 2023 FINRA Investor Education Foundation
Generation Z

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oNearly 6 in 10 (56%) Gen Zs invest in securities or crypto assets

• 19% of whom invest only in crypto assets

oSources they use = social media (48%), internet search (47%), parents (45%)

Sources they trust = parents (27%), financial pros (24%), internet (18%)

• Social media trust is much lower (12%), just below influencers/pundits (15%)

o Ability to start small (67%) and curiosity (65%) were most cited as drivers to 

investing

• Nearly half (45%) were motivated based on a promotional incentive, such as 

cash, crypto or stock

o Investors much more likely than non-investors to have financial education

© 2023 FINRA Investor Education Foundation
What Works

© 2023 FINRA Investor Education Foundation 8
o Experience Helps Knowledge

• 2020 new investors who opened accounts to learn generally 

saw their knowledge scores rise when retested in 2022 

• 2009 Learning Point Associates evaluation of The Stock 

Market GameTM (impacts on financial knowledge & math skills)

o Emotion Hinders Optimal Behavior

• Focus on ways to disrupt impulse

• Find ways to be where investors are at those

• Further examine role of digital engagement practices

Investor Knowledge:

© 2023 FINRA Investor Education Foundation 9
o Meta-analysis confirms 

impact

o Quality & quantity matter

o Connection with 

numeracy & math skills

Financial Education More Broadly

© 2023 FINRA Investor Education Foundation 10
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What We “Don’t Know” About Financial Literacy

o While the number of 

correct answers has 

dropped from 2009 to 

2021...

o ... for nearly all groups, 

selecting “don’t know” 

was the biggest driver 

of the decline

https://finrafoundation.org/sites/finrafoundation/files/WhyIs-Measured-Financial-Literacy-Declining.pdf (August 2022)

© 2023 FINRA Investor Education Foundation
What’s Next

© 2023 FINRA Investor Education Foundation 12
Ways the SEC Can Help

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Continue 

innovative, 

tailored outreach 

strategies

Conduct or 

collaborate on 

retail-investor 

centered 

research

Champion the 

cause for 

consumer 

financial wellness

© 2023 FINRA Investor Education Foundation
Resources

© 2023 FINRA Investor Education Foundation 14
o87 studies, issue briefs 

or academic papers 

supported and/or 

coauthored by 

Foundation staff

oTopics include:

• Financial Capability 

& Inclusion

• Retail Investing

• Consumer Financial 

Fraud

• Aging & Financial 

Decision Making

• Evaluation Studies

FINRAFoundation.org/research-center

© 2023 FINRA Investor Education Foundation 15
Selected Research on Retail Investors

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New Investors 2022: Entering the Market in Novel and Traditional Ways (4/24/2023)

Researchers from NORC at the University of Chicago and the Foundation examined differences 

between investors entering the market in 2020 and new investors entering the market in 2021–2022, 

including those investing through the purchase of cryptocurrency.

Where Are They Now? Following Up With the New Investors of 2020 (3/27/2023)

In follow up to a 2020 study of new investors, researchers from the Foundation and NORC at the 

University of Chicago returned to those investors in 2022 to gain insights into their investing 

experiences, as well as changes in knowledge, goals, holdings, and more.

Investors in the U.S.: The Changing Landscape, an NFCS Report (12/15/2022)

The Foundation's 2021 NFCS Investor Survey found that a substantial proportion of investors joined the 

market relatively recently, revealing a new generation of younger and less experienced investors.

Investing 2020: New Accounts and the People Who Opened Them (02/02/2021)

NORC and Foundation researchers examine the characteristics, motivations, influences, behaviors, 

attitudes and perceptions of investors who entered the financial markets in 2020 amid the COVID-19 

pandemic.

© 2023 FINRA Investor Education Foundation
Research on What Works

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Financial Education Matters: Testing the Effectiveness of Financial Education Across 76 Randomized 

Experiments (04/04/2022) Researchers used a meta-analysis to review financial education randomized 

experiments and found that financial education improves both financial knowledge and financial behavior.

Can Educational Interventions Reduce Susceptibility to Financial Fraud? (03/10/2021)

The Foundation and USC’s Center for Economic and Social Research (CESR) experimentally examined the 

effectiveness of short, online educational interventions in reducing susceptibility to fraud.

The Stability & Predictive Power of Financial Literacy: Evidence From Longitudinal Data (10/29/2020)

Using data from NFCS surveys administered to the American Life Panel, researchers from GWU and USC 

found financial literacy is a strong indicator of positive financial outcomes for the future.

State Financial Education Mandates: It’s All in the Implementation (01/2015)

If a rigorous financial education program is carefully implemented, it can improve the credit scores and 

lower the probability of delinquency for young adults.

Randomized Controlled Trial Evaluation of The Stock Market GameTM (07/2009)

With a Foundation grant, Learning Point Associates ran a randomized controlled trial (RCT) to examine the 

causal impact of the Stock Market Game on math achievement and investing knowledge.

© 2023 FINRA Investor Education Foundation
Many Gen Zs do not yet invest, largely due to income 

constraints and the challenge of meeting expenses, as 

well as a lack of education and knowledge about 

financial topics and limited familial influence.

‒Gen Z and Investing: Social Media,

Crypto, FOMO, and Family

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Food for Thought

© 2023 FINRA Investor Education Foundation