Retail investors have continued to expand in sheer numbers and levels of technological sophistication over the last several years. According to recent Celent data, the retail investor market is estimated to make up 38% of the current US adult population, with self-directed investors growing at a quicker rate then non-self directed investors. The expanded use of online trading and better access to financial information through sophisticated technology is often cited as a key driver for retail market growth. As the number of actual investors and the volume of assets have grown, client expectations have evolved, driving market needs and technological innovation to keep pace with this influential segment.
U.S. retail investors live in the generation of “now.” Gen X and Y individuals have grown accustomed to having every type of service at their fingertips; anytime, anywhere. From car services to food delivery to on demand laundry services, this trend has encompassed all aspects of daily life and digital access to banking and brokerage accounts is no different. The next generation of investors want ease and accessibility when accessing these accounts across multiple devices, while also having access to their advisors when making important financial decisions.
It is now quite common for retail investors to have multiple accounts and it is important for the advisor, investor and brokerage to have a comprehensive view of the portfolio. According to Celent, account aggregation is a new demand financial institutions are seeing from this next generation of investors; however automated devices are not an all-or-nothing practice. Investors want to have access to consolidated account statements from their advisors, but also have the ability to run ad hoc reports from their own devices when needed.
Overall, investors want to see transparency and reporting from advisors, with access to the same types of tools that the advisor has. If advisors cannot provide ease-of-use and account accessibility, they risk losing the customer. Retail investors are extremely savvy and have access to considerable research and information, so the demand for portfolio analytics with dynamic performance measurement has greatly increased. Investors want to know how their investments are measuring up against the market and their peers, as well as access to analytics which can help them improve their investment decisions.
With the actual number of investors increasing across the spectrum, having a robust offering is crucial in order to capture the retail investing pool. Offering these features is no longer a competitive differentiator – they are an essential part of any bank or brokerage strategy.
Missed our recent webinar “The Race for Retail Investor Assets: Leveraging Analytics to Transform the Online Investment Experience”? Download the full webcast below to learn more about the evolving expectations of the retail investor and the technology imperatives firms face in order to remain competitive.