To find out, Brunswick surveyed 1,000 retail investors across the US; the youngest was 18 years old, the oldest was 85 but all hold a minimum of $10,000 in invested assets (excluding their homes). The research probed to understand where retail investors stash their cash, how they consume relevant information, and ultimately what influences their decision to buy or sell.
But the rise of retail investors, in one sense, is welcome news for US businesses who are seeking shareholder support against a new wave of shareholder challenges at their annual meetings. Retail investors are commonly “friends” of management in the sense that they are much less likely than their institutional co-owners to show up on voting day. Recent research from Broadridge and PwC show retail investors voted only on 30% of the shares they owned in 2021 while institutional investors voted 83% of their shares.
That may change. AGMs are becoming increasingly digitized, while online trading platforms are making it easier for retail investors to participate in these AGMs. Some have noted that the low voting rate among retail investors represents an opportunity for companies to increase engagement among a generally sympathetic cohort of shareholders. But increased engagement might also bear some risk: as evidenced recently when AMC Entertainment CEO Adam Aron remarked retail investor social media posts are “laced with hostility, threats.”
We found a wide disparity in investor types; some differences expected and some not. Predictably we see divides between younger and older investors. Roughly 42% of young investors are currently investing in cryptocurrency, whereas only 5% of seniors have exposure. Somewhat surprisingly, younger investors are more likely to allocate a larger portion of their portfolio to cash relative to equities—perhaps as their capital requirements dictate.
But how does a company think about, let alone engage with, retail investors—what strategy speaks to both a young professional new to the market and a retiree managing a multimillion-dollar portfolio?
“There is always a well-known solution to every complex problem—neat, plausible, and wrong,” the acerbic journalist H. L. Mencken wrote in 1920. It’s worth bearing in mind as companies think about engaging with retail investors: the right strategy will necessarily vary by company. Yet our research highlights three areas in which retail investors are in broad agreement, and offer tangible steps that companies can begin to take:
1. Provide simple, accessible, and frequently updated information
Current company efforts to communicate with retail investors are good, not great. While over 90% of US retail investors are somewhat satisfied with how companies communicate, that satisfaction is lukewarm—67% reported being “somewhat” satisfied, while only 23% were “very” satisfied.
