Financial planners are increasingly encountering the emotional side of investing, particularly anxiety driven by social comparison. New international research published in the Financial Planning Research Journal explores how peer-inspired investing contributes to financial anxiety across generations, offering practical insights for advice professionals working with clients at different life stages.

The Link Between Peer Influence and Financial Anxiety

The study, using data from the U.S. National Financial Capability Study, finds:

• People who invest due to peer influence are significantly more likely to experience financial anxiety
• This effect is strongest among Millennials and Gen X, compared to Baby Boomers
• Higher investment literacy and confidence in decision-making are associated with lower anxiety

In short, investing “to keep up” can carry a real psychological cost.

Not All Generations Are Affected Equally

The generational differences are clear:

• Millennials reported the highest financial anxiety, despite high comfort with investing
• Gen X also showed elevated anxiety, especially under peer influence
• Baby Boomers were least affected by both peer-driven investing and anxiety

• Gen Z shows high exposure to peer influence, though results were more limited due to sample size

For planners, this reinforces that financial anxiety is shaped by life stage, social environment, and experience, not just age or wealth.

Why Peer-Inspired Investing Can Be Risky

The research highlights a key risk for planners to watch for: herding behaviour.

When clients follow peers into investments without a clear understanding of risk or personal suitability, poor outcomes can feel like personal failures, not just financial losses. The study suggests that, particularly for Millennials and Gen X, investment results may feel tightly linked to self‑worth, competence and social standing.

Social media amplifies this influence by presenting curated success stories that rarely show volatility, mistakes or long‑term context.

What This Means for Financial Planners

Clients may:

• Feel anxious despite making sound financial decisions
• Appear confident in investing platforms but lack depth of understanding
• Be motivated by fear of missing out (FOMO) rather than personal goals

This is where advice adds enormous value.

Practical Takeaways for Adviser Conversations

• Name the peer effect: Help clients recognise when peer comparisons are influencing their decisions.
• Anchor Goals to Values, Not Others – Refocus conversations on what matters to the client.

• Be generationally aware: Consider life-stage pressures without stereotyping

• Reframe and reflect: Normalise volatility and revisit decisions with perspective.

• Know when to refer: Engage financial therapists when anxiety is significant

Why This Research Matters

This paper adds to a growing body of global research recognising that financial success and financial wellbeing are not the same thing. By publishing and sharing this work through the Financial Planning Research Journal, the FAAA continues to support Australian advisers with access to international best‑practice research.

Final Thoughts

If we ignore peer influence, we’re missing a major driver of modern financial behavior, especially in a digital-first world.

Investment decisions don’t happen in a vacuum. Financial planners play a critical role in helping clients step back from comparison, reconnect with their goals, and make decisions they can live with, financially and emotionally.

Want to read the full research?

Read the full research paper titled “Peer‑Inspired Investing and Financial Anxiety: Does Generation Classification Matter?” in the Financial Planning Research Journal, published by FAAA.

The FAAA is proud to support and share global best practice research, helping Australian financial planners stay at the forefront of client care and professional excellence.