The Next Generation Investor

By Isabella Fonseca, Research Director, Wealth Management at Celent

Bio: Isabella Fonseca is a research director within Celent’s Wealth Management group. Mrs. Fonseca’s current research focuses on wealth management technology in both Europe and North America. Mrs. Fonseca has extensively covered topics on wealth management trends, retail brokerage, financial planning, advisor platforms, and cost basis reporting. 

The “next generation investor” will leverage digital channels provided by brokerage firms to better enhance their user experience. These tech savvy investors are well educated and tend to be of high socio-economic status.  As the market evolves and investment needs continue to change, this group will rely on a new breed of interactive, data-driven tools to help them save time and generate new investment ideas.

Online brokers have been leading the charge as early adopters in developing a digital strategy that delivers a more customized, end-user experience. Self-directed brokers and full service firms are increasingly looking to develop innovative technology solutions as a competitive differentiator. So what are the key, user-focused functionalities the next generation investor is looking for in the online brokerage space?

Technology

For investors that utilize a brokerage firm for both banking and brokerage services, they will look to a single-sign-on authentication process and common User Interface to eliminate the hassle of multiple log-ins. The ability to view holdings and move money across multiple accounts, combined with traditional banking/brokerage app functionality (remote deposit capture, place trades, access news, etc.) will create a more seamless end user experience.

– For apps targeting the traditional investor segment: the ability to contact an advisor or representative directly through the app will save time.
– For more advanced traders: adding FX and/or futures trading into one platform, more technical indicators, customizable/configurable layouts, streaming videos, and second-level details.
– For all investors: increasing focus on new charting, usability enhancements. Tablet apps will also facilitate more configurability/custom layout tools.

Large firms are continuing to focus on developing native apps to drive their mobile experience. However, smaller players are beginning to develop hybrid applications that support a wide array of devices and user interfaces.  The rise in custom applications that can adapt to various mobile devices will drive new business opportunities and capture additional market share for these players.

Social Media

Within the world of social media, there has been little change in the online brokerage space, but those firms that have remained active are continuing to attract new business from retail investors. Some of the key functionality that will be attractive for the next generation investor will focus on:

– The ability to engage with customer service representatives and traders within the community platform.
– Building and developing more interactive functionalities such as sharing trades or trading ideas.
– Offering new “sharing” or “community-like” features that can be available in private trading networks, including the ability to follow other investors, share charts, view top performers, and compare portfolio performance.
– The ability to review and tailor individual portfolios and the ability to discuss investment ideas in an online forum.
– Crowd-investment – investors can view investment activity and communicate with peers in real-time.

In summary, the next generation investor will leverage digital capabilities as an integral part of their relationship with and the services provide by their brokerage firm. On the other end of the spectrum, brokerage firms will look to integrate digital strategies with existing business service models, while continuing to provide innovative solutions that provide a more seamless user experience, differentiating themselves from competitors.

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