Understanding Retail Investors in 2023
Retail investors are a large, diverse population of individual investors, meaning understanding their key areas of concern and motivations can be difficult. Dissecting the retail base of listed companies and understanding what they care about can be challenging as data is fragmented, often incomplete, and not built for efficient outreach or quickly surveying perceptions and expectations.
Understanding this audience can be critical given it accounts for approximately 25% of trading flows[1] on any given day. Retail investors drive more than just headlines[2].
Fortunately, as part of our recent research into the shifting expectations of CEOs[3], we captured a snapshot of high level behaviors and preferences of retail investors in the United States.
Five Characteristics of Retail Investors
While understanding the needs of individual retail investors can be a challenge, survey research is one way we can identify retail investors’ unifying characteristics, which can inform engagement strategies, whether around a proxy battle or in an effort to maintain or grow a retail base.
Here are five characteristics that can form the basis of your retail investor engagement strategy based on data we’ve collected:
The vast majority of retail investors are online and use social media to follow company activities
- 88% of retail investors use social media to follow companies.
- Facebook (65%), Instagram (45%), and YouTube (45%) are the most commonly used platforms, while more than one-third use Twitter (38%), LinkedIn (36%) and roughly one-quarter also engage with companies via TikTok (27%).
Retail investors are actively searching for information about companies, and this is influencing their perception
- 82% of retail investors are actively searching or receiving alerts about companies. Of this percentage, more than one-third (38%) are searching or receiving information “all the time” and 45% claim “some of the time.”
- As a result of news or stories in the media or online that they’ve seen, 53% of retail investors have a more positive perception of the company.
TV networks continue to play a significant role in keeping retail investors up to date
- CNN (48%), Fox News Channel (43%) and MSNBC (31%) are the top three networks retail investors are watching to get news and information on business and current events.
Retail investors want to see company CEOs prioritize financial performance and employee wellbeing
- Retail investors consider the top priority for CEOs to be the “strengthening of financial performance/profitability (39%) and ensuring efficient operations (35%).”
- That said, they also want to see CEOs investing in people – namely, retaining and attracting the best talent (38%).
- Moreover, 36% want to see companies “strengthening current employee health and wellbeing.”
There are some key areas where retail investors want to hear more publicly from CEOs
- Retail investors agree that CEOs should be publicly involved in talking about data privacy (67%), human rights in labor practices (65%), bringing manufacturing jobs back to the U.S. (65%), cybersecurity (64%) and the environmental impact of their business operations (63%).
Engaging with Retail Investors
Based on this knowledge and our experience, we focus on three central tenets in our strategies for engaging with retail investors: meeting them where they are, giving them what they want, and keeping them close.
Meeting Retail Investors Where They Are
Using a combination of digital data analysis and survey research like the above, we can identify where retail investors are learning about and sharing perspectives on your company and meet them there.
That data can then inform an integrated approach to engaging the right media, placing the right content and developing a paid media strategy that reaches investors in the right place, at the right time.
Giving Retail Investors What They Want
Giving retail investors what they want is both thematic and functional. While survey data can help us understand what interests retail investors, smart content creation helps make those messages stick.
Content and outreach dedicated to retail investors should focus on making stories quick and digestible, responding to the needs of a time-pressed audience.
Keeping Retail Investors Close
Companies can keep their retail investors close by creating opportunities for ongoing engagement and then measuring that engagement. These opportunities could include sign-up forms, virtual events and interactive tools that invite retail investors to get in the game.
In turn, these engagements can be used to test what captures retail investors’ attention, while periodic digital analyses and surveys can help track perspectives over time.
[1] “The Rise of Retail Traders,” BNY Mellon Wealth (November 2021), https://www.bnymellonwealth.com/insights/the-rise-of-retail-traders.html#:~:text=Retail%20investors’%20share%20of%20total,becoming%20long%2Dterm%20market%20participants.
[2] Zak Mehan, James Dominick and Sara Scarlett, “Lessons from the Rise of Retail Investors: How IR Can Better Engage Institutional Investors,” FTI Consulting Strategic Communications (January 2023), https://fticommunications.com/lessons-from-the-rise-of-retail-investor-how-ir-can-better-engage-institutional-investors/.
[3] “CEO Leadership Redefined – 2023,” FTI Consulting Strategic Communications (May 2023), https://fticommunications.com/ceo-leadership-redefined-2023/.
The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
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