The Blog

Embrace Your Inner Retail Investor and Discover How NextGen are Compounding Their Wealth

Ms Millennial Money, Sarah Penney

Last week, TEA Founder and CEO, Sheryl Cuisia (@sherylinmotion), was a speaker at law firm Herbert Smith Freehills’ Annual Update for Listed Companies, sharing fresh insights about maximising engagement with retail investors. It was a conversation packed with revelations about nextgen investors, hot tips, and new ideas to explore.  

What struck me though, was a simple statement that Sheryl made: ‘we are all retail investors’. Companies are comprised of retail investors, directors and employees are largely shareholders themselves, and they have an opportunity to reshape the nextgen retail landscape, starting with their own backyard.  

By reconnecting with our inner retail investor, examining how we would like to be engaged with and immersing ourselves in retail communities, there are fascinating learnings to be made, which can be brought back to reshape investor engagement approaches.  

Understanding the Retail Investor Landscape 

Today, there are nearly 30 million retail shareholders, and according to Statista, most of these investors belong to the Gen Z and Millennial (“Gen Zennial”) generations. The traditional investor profile is shifting, rather than striving to make £1million in 10 years, there are hordes of nextgen investors, active in online forums, making millions in weeks, months and years. The risk appetite of these ‘degen’ investors, is not for the faint-hearted, but their attitude is to be respected. They’re challenging the status quo, looking for new opportunities and engaging with one another to sniff out wealth building opportunities.  

While I would never suggest anyone dive straight into high-risk investment strategies, understanding how Gen Zennial investors approach their portfolios and their attitudes to wealth is fascinating and enlightening.  

As well as reflecting on our own portfolios and investment strategies, nextgen attitudes also offer interesting learnings for companies. To counter outflows from institutional investors, companies could look at this wave of ‘new’ retail millions as an alternative source of capital. 

Challenging Stereotypes 

One of the key insights Sheryl shared, and that we have observed through our work at TEA, is that we have to challenge stereotypes and preconceptions of Gen Z to fully understand their approach to investment. 

For example, a prevailing stereotype is that this generation prioritises environmental, social and governance (ESG) issues above all else. While this is true in some circles, we’ve found the opposite to be the case in digital trading and investment communities. Younger generations of investors are increasingly motivated by profit and return on investment vs ESG and sustainability concerns. One of the most popular UK stocks amongst these groups, for example, is Rolls-Royce Holdings PLC, an aerospace and defence company which doesn’t fit stereotypical Gen Z sustainability concerns but consistently delivers returns.  

Diving into discussions on investment platforms like eToro and Trading 212 is a fascinating experience, allowing us to peak behind the curtain, find out what’s really getting people excited, and begin to understand how young traders are supercharging their wealth.  

Walking a Mile in a Degen’s Shoes 

Spending time in the digital forums where nextgen millionaires hang out sheds light on the stocks and cryptocurrencies that the ‘degens’ (high risk speculative traders) are buying and selling each day, but also how they interact with each other. They’re spaces dominated by ‘bros’ and there’s a degree of aggression and ego, but there’s also knowledge sharing and a community spirit which aims to increase the wealth of the group. 

Understanding these motivations and behaviours could prove invaluable for Company Secretaries and Investor Relations teams. Becoming a part of the community and observing how today’s wealthy investors operate and communicate, could give companies a head start in figuring out how to engage and access ‘new’ retail money.  

Empowering Company Representatives 

CoSecs and Investor Relations professionals who view themselves primarily as retail investors have an opportunity to be instrumental in helping their own companies to comprehend the needs and frustrations of those who are disengaged from traditional corporate communications.  

With IR and CoSec teams who are plugged into nextgen retail communities, insider insight could be disseminated throughout organisations and by cultivating a culture that prioritises retail investor engagement, companies could find they’re able to discover new avenues for funding and innovation that might have previously gone unnoticed. 

Redefining Engagement Strategies 

Engaging with crypto and trading millionaires, attracting their interest and ultimately, their investment, is a long-term play. However, beginning to assess communications strategies, considering how changes could be made, in line with the culture of modern day retail investors, means steps towards meaningful engagement could be taken. 

Some initial steps could include re-examining the channels through which companies engage and adapting language to better resonate. Looking at the approaches of popular US stocks like Tesla, which recently shared its Notice of AGM via X, is an interesting place to start. However, there are also changes that can be made to the main stays of investor engagement. For instance, reimagining annual general meetings (AGMs) as engaging experiences can ignite enthusiasm and attract engagement from retail investors. Implementing hybrid meeting formats, utilising accessible technology, and ensuring clear communication in AGM notices can enhance participation and interest. The goal is to transform the AGM from a routine formality into an exciting and informative event that retail investors want to attend. 

Leveraging Technology for Engagement 

Technology will, of course, be the key to enhancing retail shareholder engagement. Innovative fintech solutions provide effective communication platforms, enabling companies to connect with their investors where they are most active—online. This is particularly relevant for younger investors who prefer engaging through social media and investment applications. 

By leveraging these technologies, companies can develop dynamic relationships with retail investors, offering regular updates and insights that encourage dialogue. This proactive approach could help build trust and loyalty among shareholders, leading to stronger investment relationships. 

The Takeaway 

We’re entering a new frontier in retail investment. Cryptocurrencies and the emergence of digital communities are enabling individuals to make (and lose) money at previously unthinkable rates. Understanding how these worlds operate, and how young people are making their millions, are lessons that could help us all to approach our own investments differently, as well as enabling us to reexamine how companies interact with retail.  

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