A new Fidelity survey sheds light on a growing divide in the way novice investors and seasoned market participants approach risk, portfolio construction, and investment decision-making.
For wealth advisors, the findings offer a critical window into client psychology—particularly among younger, self-directed investors who are entering markets in a very different environment than previous generations.
The inaugural State of the American Investor study surveyed 2,007 U.S. adults with at least $25,000 in investible assets, dividing them into three cohorts: those with fewer than five years of investing experience, those with six to 10 years, and those with 11 or more years. The results reveal a striking gap in confidence, risk appetite, and reliance on information sources between newer and more experienced investors.
A Tale of Confidence and Risk
Perhaps the most telling statistic is the difference in portfolio confidence. Over half (56%) of investors with fewer than five years of experience believe their portfolios will outperform in the coming year. By contrast, only 34% of investors with more than a decade of experience feel the same. Even more telling, 18% of novice investors described themselves as pursuing explicitly “risk-on” strategies—signaling a willingness to embrace volatility in pursuit of higher returns.
By comparison, seasoned investors—those who have weathered multiple market cycles—show a markedly more cautious outlook. Fidelity attributes this divergence to experience: investors who have lived through sharp drawdowns such as 2008, the dot-com bust, and even the pandemic crash are more inclined to temper expectations and lower their risk tolerance. In contrast, new investors, many of whom entered the market during the strong bull runs of the past half-decade, have little lived experience of long, grinding downturns.
For advisors, this presents a clear planning challenge: reconciling client optimism with prudent risk management, particularly among younger investors who may underestimate the severity of market reversals.
The Social Media Effect
One of the starkest differences between the two groups lies in the sources of information driving investment decisions. Thirty-six percent of new investors report that most of their decisions are influenced by social media platforms. Among experienced investors, that figure is just 11%.
The risks of this reliance are already evident. Nearly half (47%) of novice investors admit they’ve made a poor investment decision based on social media-driven insights. This pattern highlights a crucial advisory opportunity: helping clients separate noise from signal, evaluate sources critically, and apply disciplined frameworks to decision-making rather than chasing trends or viral stock tips.
It also suggests that advisors may need to be more proactive in monitoring the narratives clients encounter online, not to validate them, but to help clients contextualize and, when necessary, correct misinformed investment behaviors.
Diverging Priorities
The survey also shows how investor priorities shift with experience. Nearly half of those with more than 10 years of investing history rank limiting losses as their top priority. Preservation of wealth and risk mitigation naturally become more prominent as investors accumulate assets and move closer to retirement.
By contrast, 50% of newcomers identify their top goal as learning about new asset types and experimenting with “complex trading strategies.” Rather than prioritizing capital preservation, they are actively pursuing education through action—often in high-risk areas of the market.
This enthusiasm for exploration explains why newer investors are gravitating toward nontraditional assets. Fidelity found that 69% of novice investors report comfort with crypto and other alternative assets, compared with just 29% of experienced investors. Nearly half (46%) of beginners say they plan to buy cryptocurrencies in the near future, making digital assets a core feature of their financial journey rather than a fringe allocation.
Inexperienced investors also show surprising familiarity with advanced income-generating tools such as stablecoins, covered calls, securities lending, and bond ladders—vehicles many seasoned investors approach with caution. While knowledge of these tools is positive in theory, the concern for advisors is whether clients possess the context and discipline to deploy them effectively.
Market Sentiment: Optimism for Self, Caution for the Market
Interestingly, while investors are optimistic about their own performance, they are more pessimistic about the market as a whole. Sixty-four percent of all respondents expect their personal portfolio performance to match or exceed last year’s results. Yet nearly half predict the broader market will perform worse than it did the prior year.
This “I’ll do better than the market” mentality underscores another key advisory challenge: investor overconfidence. Advisors know that consistent outperformance is rare, especially among retail investors relying on self-directed trading. Helping clients set realistic expectations around returns and benchmarks is an essential role for advisors in this environment.
The Role of Age and Market Timing
Much of the divergence between new and seasoned investors can be explained by age. More experienced investors tend to be older, naturally exhibiting lower risk tolerance, greater emphasis on capital preservation, and less engagement with social media. Younger investors, meanwhile, are more comfortable with digital tools, highly influenced by online communities, and less risk-averse.
But there’s another layer: market timing. New investors entered markets during a highly unusual period. Over the last five years, they’ve navigated the pandemic crash, a period of extraordinary monetary and fiscal stimulus, speculative crypto surges, meme-stock manias, and one of the most resilient equity bull markets in history. For much of this period, dip-buying was rewarded quickly, reinforcing the idea that volatility presents opportunity rather than danger.
The S&P 500 is nearly 30% higher than its April 2020 pandemic lows, and many new investors have only ever experienced quick recoveries. Unlike their older counterparts, they lack the memory of decade-long slogs following 2000 or the global financial crisis in 2008–2009. This experiential gap may explain why they view risk-taking as a natural path to wealth-building rather than a source of potential setback.
Implications for Advisors
For wealth advisors and RIAs, the survey findings underscore the importance of tailoring guidance to generational and experiential differences:
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Managing Expectations
Advisors must help newer investors understand that recent history of quick recoveries is not guaranteed. Reinforcing lessons from longer market cycles can ground client expectations and discourage overconfidence. -
Risk Education and Guardrails
With nearly one in five novices actively pursuing “risk-on” strategies, advisors should emphasize the importance of diversification, position sizing, and downside protection. Conversations about drawdowns, liquidity, and time horizons can serve as essential guardrails. -
Countering Social Media Narratives
Since social platforms now act as de facto research hubs for many investors, advisors can play a vital role in providing credible alternatives. Positioning themselves as trusted sources of context and analysis may not only prevent costly mistakes but also build long-term client loyalty. -
Bridging Interest in Alternatives with Prudence
With crypto and other alternatives firmly on the radar of younger clients, outright dismissal is no longer a viable strategy. Instead, advisors can frame these investments as potential satellite holdings within a broader, risk-managed allocation—meeting client interest while protecting their portfolios from overexposure. -
Generational Context in Planning
Older, seasoned investors require a different approach—one that emphasizes capital preservation, tax efficiency, and income generation. Advisors must balance the conservative instincts of older clients with the experimental tendencies of younger ones, often within the same family wealth structure.
The Bottom Line
Fidelity’s State of the American Investor survey highlights how the democratization of investing, new technologies, and cultural shifts have reshaped retail investor behavior. New entrants are confident, risk-tolerant, and eager to experiment with new asset classes and strategies—sometimes with limited appreciation of the risks. Experienced investors, meanwhile, display caution born from hard-won lessons in previous downturns.
For advisors, this divergence presents both challenges and opportunities. The challenge lies in tempering exuberance without dampening engagement, guiding clients away from social media-driven mistakes, and helping them build durable portfolios. The opportunity is equally clear: advisors who can bridge the gap between enthusiasm and prudence may position themselves as indispensable partners in a market environment where the next generation of investors is already rewriting the playbook.
In short, newer investors are bringing optimism, risk-taking, and digital-native habits into the marketplace. Veteran investors bring caution, perspective, and discipline. The advisor’s role is to help clients integrate the best of both approaches—turning youthful confidence into sustainable wealth while grounding long experience in forward-looking opportunity. Fidelity’s survey serves as a reminder that understanding client psychology is just as critical as understanding markets, and that the next wave of investors will require a distinctly different kind of guidance than the last.
