00:00A new survey from Betterment found that Gen Z is blurring the lines between sports betting and
00:04investing. More than a quarter of Gen Z investors see gambling on sports as part of their long-term
00:09financial strategy, and half have pulled money meant for investments to bet on sports. For more
00:14details, let's bring in the CEO of Betterment, Sarah Levy. Sarah, should we be concerned about
00:20this? I mean, it's not a great fact, right? So I think, you know, gambling has always existed,
00:26and as we know, the casino always wins. So my feeling is gambling's okay, but it should be part
00:32of your entertainment budget, not part of your long-term savings goals. Well, what's happened
00:37that's blurred the lines? Again, if they're seeing this as an investment, what in the sports betting
00:43universe has made this, I guess, we have more accessibility from apps, but why is this mentality
00:49forming? Well, I think, I mean, I think accessibility is exactly the right answer, right? And I also
00:54think it's the proximity to investment apps that they trust. And so it's not just that it's widely
01:01available, it's that it's literally sitting alongside places where you can save for your
01:06retirement. And I think it's really sort of a dangerous trend. As a fiduciary, I think our
01:13preference would be that these things were a little more separate so that people understand the
01:18difference. So what do you do in this scenario as a steward of so many people looking to invest,
01:24prepare for retirement? Is there a lot of work that someone like a Betterment can do,
01:28or does this maybe come down to policy to try to put clear divides between sports gambling and
01:34investment? I think it's a great question. And I think ultimately it will be hard for the
01:40fiduciaries alone without any regulatory oversight to create that separation. Because as most of us know,
01:48gambling is lucrative for the casino, right? And so I think, you know, we at Betterment are not going
01:54to pursue this strategy at all, because we really believe in setting people up for the right long term
02:00future. And particularly in an age where we're not sure if Social Security is going to get the job done
02:04for this next generation. It's incumbent upon folks not to take that extra $100, if they even have that
02:10hundred dollars and put, you know, gamble it away when they should be really, you know, setting
02:15themselves up for a positive future. Sarah, does this mentality, though, seep into things like equity
02:21investing? Already post-pandemic, you had the rise of things like Wall Street bets, where people were
02:27taking big punts and putting a lot of their life savings on YOLO trades. Does that continue to get
02:32worse if you have a populace, especially a younger one, who are used to doing gambling-type
02:38activities with their finances? I mean, look, I take the, I'm going to follow your lead and agree
02:45with you, which is I personally- You can disagree, Sarah, by the way. You're definitely allowed to.
02:49No, I'm sure I can. I think that I really genuinely believe this is not a good trend,
02:54but I also think we can't sort of fight gravity. And so what we have to understand is like,
03:00what's the mentality of this generation? Where are they getting their information? They're getting
03:04it from AI. They're getting it from social media influencers. Some of these social media influencers,
03:09you know, know what they're talking about and others don't and are just, you know, sitting on
03:13top of a fancy car, kind of trying to sell their wares. And so you can't fight gravity when this
03:19generation wants to get their information in those places. I think what we can do is we can educate and
03:24we can look for some regulatory oversight to help us really create a distinction between what does it
03:30mean to set yourself up for a successful future and what is gambling, which is really entertainment.
03:33Um, it's a great point in your study. You have 60% of Gen Z get their financial news from
03:38social
03:39media, which is also maybe bad news for, for myself who hope that Gen Z also watch this show
03:44and get some of their financial news from that too. Sarah, what does that mean for, okay, for example,
03:49you just launched this custom portfolios. You let users pick from over 5,500 individual stocks.
03:55How do you do that in a way by giving them this power, but also making sure they don't abandon
04:00basic
04:01things like portfolio diversification? So what we're trying to do is create guardrails and a
04:07structure in which they can have flexibility. And so if you turn back the clock 15 years, when we,
04:13when Betterment first started, we were a set it and forget it, you know, we'll take care of it,
04:17right? We'll figure out your portfolio. We'll put you in the right kind of long-term answer,
04:21and then we'll automate for all sorts of, you know, tax savings and other benefits.
04:25I think what we saw to your point, like during COVID is once there were zero commissions on
04:31trading, the self-directed investing phenomenon really took off. And so the question we asked
04:35ourselves is how do you sort of meet in the middle, which is give these investors the flexibility to
04:40sort of vote with their, their own wallets and make their own decisions, but then set it up within
04:45a structure that can help them carry that forward and provide some AI, even some AI insights,
04:51right? To help them understand the choices they're making. Sarah, before I let you go,
04:56we should probably talk about an audience that hopefully is watching the show. And I would assume
05:01so not turning to TikTok for financial advice. And that's Gen X. Also in your study, they had the
05:06lowest retirement confidence of any generation at 31%. It's peculiar at a time that markets are at
05:13all time highs. Why do you think Americans and specifically Gen X are feeling less secure
05:17about retirement? So I think the real issue for Gen X is that they're getting closer to retirement and
05:24they're seeing that their nest egg is maybe not what they had hoped 20 years ago. Maybe they got
05:28started too late. I mean, overwhelmingly what we're seeing with all the generations is that folks regret
05:34starting too late. And so I think Gen X is basically thinking, okay, my career is, is in the, in
05:41the
05:41backs in the back half. And now I don't have many more years to save. And wow, is my money
05:46going to
05:46stretch when the cost of living is so much higher than it was when I started saving, you know, a
05:50few
05:50decades ago.
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