Retail Investor Challenges

Investments for any county, company or individual is bases for their growth. Without investment, they can’t attain the financial stimulus and stability they want most of the times. Individuals lack in investment in market due to multiple reasons. Less than 2% of people do invest in the markets.

What’s keeping individual away from investing? The major reason for not investing are access to financial product, Financial literacy, and trust.

Access:

During the recent times, internet penetration, mobile reach have increased significantly but still a significant population still don’t have access to them. Even if they have access to the internet, they might still lack the mechanism required to invest. Individuals might not even have access to right information required for investing and some might not have access to products which they want or need and that keeps them away from investing.

To cater against these issues, the need is to create responsible access where retail investors can access education, platforms, products, services and support they require. We also have to ensure that all have same access to products as much as possible without barriers. Also, investors should get the same access of products irrespective of their location globally.

Education:

Financial education for the young generation is not inline with the requirement of the people. They should be given knowledge about investment and its requirement at very early stage which is not done and that’s why in spite being educated they still lack the financial literacy because of the mindset set in their minds from elders. Companies should also work on improving their communication to retail investors and make them aware of the investment benefits more clearly.

To make the coming generations investing heavily, we have to ensure that they get financial literacy in school itself. They should be aware about requirement of financial capability, stability and future requirements. There is vast amount of information available regarding markets and investments but all the information is very much fragmented. It is required to consolidate this information in true manner to gain trust from the investors and educate them.

Trust:

Retail investors don’t trust the market and institutions after the multiple distresses in the market and also because of overvaluation of IPOs and multiple items. These all created question to investors regarding real value and current value of multiple products and services. Because of these trust issues they don’t want to pay for services and invest in the market. Also, as people have different information available and fake news, they are afraid to trust the system.

To gain trust of retail investors, it is required to make the information available to everyone at same point and track the fairness of information and rumors. Financial institutions have to make reputation to gain the trust of the consumers. Also, they have to invest in marketing to gain trust of consumers depending on their needs. People also lack trust because of their experiences with wrong products. To gain back their trust, they must be aware of offerings suitable for them and for that companies have to invest in education and awareness.

To meet the investment needs in future and for creation income equality, it is require to make people invest and for that it is required to work on all three pillars of investment which are awareness, education and trust to institutions, products and offerings.

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