Young investors are eager to learn. New federal regulations may change that.

By James Mitchell | December 20, 2023

Younger Americans face a looming challenge: financial literacy. Three out of four teens say they lack confidence in their knowledge of personal finances. Surveys have shown Gen Z struggles to answer basic questions about saving money, the use of debt, and investing. Unfortunately, new financial regulations from the federal government could set these young Americans back even more by making it harder for to invest in the stock market.

I have dedicated my career to helping eager New York students develop basic financial knowledge and build confidence when making financial decisions – and the results have been promising. If we truly want to prepare young adults to succeed in life, we must teach them about personal finances. But we must also ensure that federal rules and regulations don’t actively work against them.

The U.S. Securities and Exchange Commission (SEC) has proposed new rules that would put in place barriers between young investors and financial markets by fundamentally altering the structure of equity markets in the United States. These proposed rules should set off alarm bells for New York’s elected representatives in Washington, D.C., who have a vested interest in ensuring the next generation of New Yorkers have access to the even more and better financial investing opportunities as those who came before them.

This expansive package of rules would make sweeping changes to the current system and how stocks are priced, sold, and reported in the marketplace. Significant new restrictions on the way broker-dealers execute orders would likely end the era of commission-free trading that has allowed everyday investors to save an estimated $17 billion over just two years. Retail investors would likely lose access to many of the popular trading platforms that have emerged over the past decade. We would also almost certainly have to pay fees for many products and services that are currently available for free.

Thankfully, a broad range of stakeholders have mobilized to tell the SEC that these proposed rules would be a disaster for retail investors. For instance, the National Association of Securities Professionals wrote to the SEC expressing their concerns that “these proposals will harm millions of retail investors by making the process of buying and selling stock more difficult and potentially reinstating barriers to entry – both economic and non-economic – that for decades kept younger, lower income, female, and minority individuals out of the market altogether.”

But lawmakers in Congress, which oversees the SEC, need to join the chorus of opposition against these rules, support young people interested in investment opportunities, and not erect new barriers to accessing capital markets.

As the founder of Young Futures, a New York-based financial literacy program that helps children and teens learn the basics of business and how to invest money, I have seen firsthand how the rise of investment apps has made the world of investing more accessible for young people. With these financial apps and useful information at their fingertips, it is estimated that around 56 percent of under-25-year-olds are already investors. This is great news, as it expands the next generation’s opportunities to build wealth, start businesses, and earn a more secure financial future.

We should all be heartened by the eagerness of this next generation to invest in the stock market. While many young students may still be learning the basics of personal finances, it is an overwhelmingly good sign that they are interested in investing. I will continue to work diligently with my colleagues to ensure young New Yorkers have the knowledge and tools they need to chart successful paths toward their financial futures. But federal lawmakers must also do their part by telling regulators to avoid onerous new rules and regulations that would discourage young Americans from participating in financial markets.

James Mitchell is the founder of Young Futures.