The market turmoil of 2020-2021, along with an unprecedented surge that has renewed a focus on retail investors, has pushed direct investing platforms into the spotlight. With this rise of the retail investor comes significant opportunity, as recently highlighted by our colleague Scott Reddel. 

From a customer experience perspective, direct investing is nothing new. However, during the pandemic we witnessed the union of social (media, communities and group action) and capital (saving and trading) as customers looked for new forms of entertainment and different avenues to wealth.

The pandemic also influenced the speed of digital adoption for many and their expectations around education, advice and associated fees. This was particularly true for first-time DIY traders looking to take more control of their investing activities.

These conditions created a perfect storm for direct investing tools, and many are finding ways to embrace it.   

We can personally relate to this, given the market run in 2020-2021. And having a well developed FOMO (fear of missing out), we were all keen to get more into this action during the height of the market disruption. After some experimentation, two of us (Jess and James) reopened trading accounts with discount brokers and newer fintech trading offerings. For customers like us, there is a wide—at times, overwhelming—range of players to consider, from established brokerages to the emerging entrants.   

We weren’t alone in this journey: Canadian investors opened a record 2 million+ DIY accounts in 2020. In the US, 38% of market participants opened their first taxable account that same year. Our 2021 Wealth Management Consumer Survey showed that 55% of investors believe they could do a better job of investing themselves by making decisions that yield better returns net of advisory fees. And when it comes to building the onramp of new customers, 95% of Gen Z investors said they would consider wealth products and services offered by Google, Apple or Facebook.

Leaders across the world are finding ways to capitalize on this rise of the retail investor by moving to increasingly sophisticated trading tools and simplified experiences. They are creating more accessible, straightforward and, in some cases, free financial products and services.

In 2022, the rise of the retail investor will only continue. How should banks respond? Embrace the opportunity to deliver an incredible experience by implementing the five key themes established by the global leaders.

1. Market to the masses 

Given the competitive landscape and new entrants to direct investing, marketing’s role is more important than ever. This is a key moment to thrive, but it requires an understanding of the needs of the next generation of retail investors.

As stated in Banking with personality: Advice for CMOs from Thrivers, customers are fundamentally changed as a result of the pandemic and now is the time to reacquaint yourself with them and their needs. For the direct investing experience, in particular, this means meeting their desires for better market access, insight, digital tools and financial returns, while helping them navigate the ongoing global events that impact the markets.  

Wealthsimple’s conspicuous marketing campaigns boosted the Canadian brand’s presence last year among retail investors. Additionally, Reuters looked at the Canadian stock market’s key players and rules, reporting Wealthsimple saw new client growth of 70% in the first few months of 2021. How?   

We see these results thanks to the broader marketing strategy that differentiated the firm by focusing less on the trading technology or the “how” of investing and more on building a relatable, human-centric brand using traditional narratives, storytelling and illustration.  

With an in-house creative team from leading agencies, Wealthsimple focused on a Wealthsimple Magazine for lifestyle content. Its series, Money Diaries, profiled celebrities, clients and average people across their different financial scenarios and life stages.   

The team also used more traditional campaign methods to drive key messaging. Two “newsstands” in Toronto and Vancouver featured cheeky promotional merchandise designed to underscore the brand’s mission, such as “lottery tickets” and impulse-buy items.   

Across the campaigns and different platforms, Wealthsimple’s tone of voice is non-judgmental as it works to convert and acquire new clients. Additional bonuses such as “free stock” when opening a trade account and investing-related giveaways with social influencers added to the broader marketing approach and helped Wealthsimple reach new audiences.

2. Building trust early and often 

Great customer experiences start with trust. If there’s one place for emphasis, it’s building this connection and confidence early and often through personalized onboarding experiences and exceptional customer service, even across digital channels.  

In a market report discussing current struggles for Canadian online brokerage firms, research shows that clients who had their problems resolved in less than one day have 25% higher levels of trust than those who encountered delays or other issues. Furthermore, investors who experienced an issue with their firm are more likely to become brand detractors, meaning they’re quick to share the specific reasons they’re unhappy with a brand experience.

Given the recent increase in market participation, it’s important to find new ways of improving the end-to-end client experience and reducing friction. Those who have got this right are reaping the rewards.

Questrade, for example, provides a fully digital account opening process that takes only minutes for existing clients and one or two days for new clients. With over 100 service agents available via pre- and post-sign-on chat, email and phone, along with agents monitoring social media, there is ongoing support and consistent connection options. 

Taking this as inspiration, consider the steps available to streamline account opening and onboarding processes along with transfer experiences. Additionally, think about investing heavily in multi-channel client support and capacity for greater opportunities to transform moments of tension into meaningful, trust-building customer experiences. 

3. Demystify trading 

As we said before in the post, Beyond CX: BX delivers exceptional experiences, it’s important to explore the opportunities to harness meaningful customer information to enhance the moments in their lives that matter most.

Education is becoming the cornerstone of the investor “on-ramp”. There is now a diverse array of dynamic training sessions designed to meet clients’ needs and preferences in customized ways.

We see today’s DIY investors prioritizing education and insights, often using brokers’ web channels for their investment research and information purposes. For example, the Fidelity Learning Center was born to meet these customer needs by providing timely insights, resources for beginner support, and coaching sessions for advanced investors to make informed trading decisions.  

Fidelity leverages internal thought leaders and 32 independent research firms to integrate extensive personal finance, investing strategy and market knowledge into their platform. We know that understanding a customer and their unique circumstances helps to ensure enhanced experiences–training and educational pieces included.

In addition to making it easy, we continue to see fee compression with players moving closer to zero. This trend has made trading even more enticing and accessible to newer investors. TD is the latest bank to offer this incentive with the recently launched Easy Trade, giving customers 50 commission-free trades a year. 

Providing these incentives in the “getting started” and “leveling up” phases creates unique opportunities to better serve customers and meet their in-the-moment needs. This is critical in winning over the next generation of retail investors.

4. Innovate, don’t imitate  

Customers are benchmarking their expectations against personalized, proactive experiences like those of Netflix, not other banks. It’s time to capitalize on emerging trends and customer needs by providing alternative ways to trade, invest, save and spend, using competitive price points and novel fee structures. Once again, it’s time to build a model that allows and inspires innovation in-house. 

Think about Robinhood. Often viewed as one of the main players behind the trading activity at the beginning of the pandemic, its mission focuses on market accessibility supported by its mobile app.  

The results speak volumes: the fintech has over 21 million monthly active users. The 2020 survey, Investing 2020: New Accounts and the People Who Opened Them, found that 48% of US investors who opened their first taxable account in the past year accessed it primarily through a mobile app. In tandem with rapid growth, customer satisfaction is dipping noticeably in areas such as desktop experience and the ability to view accounts in a single place—a phenomenon which has come to be known as ‘The Robinhood Effect’. 

To capitalize on the rise of the retail investor it is critical to provide an innovative everyday customer experience. There is an opportunity to dive deeper into mobile app capabilities—even super-app possibilities. Offer unique features and value propositions, designed with simple interfaces to encourage larger deposits, kick-start investing activity, and develop stickier ecosystems. 

5. Humanize digital advice  

Remember: Money is emotional. While customers like taking control of their investments, the need to verify digital transactions still requires human validation. This could be as simple as incorporating support into your user interface design, from explaining a fee or confirming a transaction, to providing access to a human through a voice call or chat.  

One report found that 34% of clients would increase their investments if they received a hyper-personalized advisory experience.   

BMO has experimented with this humanizing approach using its InvestorLine adviceDirect. Licensed advisors are available via a phone call to answer questions, provide recommendations, discuss investment strategies, and offer coaching on available tools and dashboards.

We highly recommend leveraging your people to augment DIY investing platforms and using human-centered design to support investors who require validation. 

Across all these themes, it comes down to understanding your customers. We are experiencing the rise of the retail investor. Don’t miss the opportunity to rise and meet your current customers—and to gain new customers—as they look to get involved with direct investing at such a unique time.  

We look forward to continuing this conversation; please reach out via LinkedIn or contact us here.

Special thanks to Rachel Krisko, Accenture Song Digital Marketing Consultant, for contributing to this blog.


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