What’s the future of investing? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Answer by Morgan Housel, Partner, The Collaborative Fund, on Quora:
It’ll be harder for companies to take advantage of their customers than ever before, which is great.
Historically the job of protecting investors has fallen on regulators. But the next generation of investors — those under age 30 — have two unique characteristics:
1) They came of age during or around the Great Recession, when blind trust in financial professionals disappeared. My theory is that baby boomers — who came of age during an era when everyone who worked on Wall Street and wore a nice suit was considered a genius — have a harder time letting go of that narrative than their kids, who think the idea is crazy because their first experience with financial professionals was watching the market disintegrate in 2008. The new generation isn’t as persuaded by jargon and wood-paneled offices as previous generations.
2) The digital economy means the younger generation grew up with much higher expectations of transparency and access to pertinent information than their parents. Here again, growing up with a certain expectation is way more powerful than coming into it in your older adult years. A 12 year old with a smartphone today is probably better at quickly finding important financial information than most professionals on Wall Street were 20 years ago. So once those 12 year olds become investors I don’t think you’re going to be able to sell them perpetually under performing A Shares with a 2% management fee like you could to their parents.
People will always be susceptible to greed and fear, but I believe in my bones that the younger generations have a better BS detector than their parents.