FTI Consulting Report – Decoding the new retail investor

The tide is turning

As we saw during the pandemic, retail investors can be a significant and unpredictable force. Situations like GameStop and more recently AMC may be outliers, but these examples prove symbolic of a new era of greater retail influence over stock markets.

In areas where large index funds, cut-throat hedge fund managers and algorithmic investment strategies have dominated, why is it now that the tide is turning? Why has the previously overlooked retail investor now become a force to be reckoned with?

The main reason is that investing is becoming more accessible by:

The advent of commission free trading, making it cheaper for retail investors to trade fractional shares.

“Gamified” mobile phone trading apps becoming available to all and internet connections becoming faster.

Trading accounts offering cheap leverage with generous credit.

Social media being used as a platform for sharing success stories and encouraging a ‘following the herd’ mentality.

These factors are important individually, but combined they represent a subtle but powerful shift where retail investors feel emboldened and where companies recognise their influence. Understanding this new generation of investors, their behaviours and how to communicate with them is the first step towards integrating you, and your business, into this changing investment landscape.

And we’re helping companies safely navigate new waters.

FTI Consulting has conducted primary research with 2,000 respondents, representative of the UK adult general population (aged 18+ years old).

FTI Consulting’s work with retail investors across the UK profiles who these investors are, how they behave and their preferences. These new investors are very different to their predecessors and this burst of hyperactive retail investor participation brings a very different psychological profile to financial markets.