Retail Investors’ Behaviour in the Digital Age: How Digitalisation is Impacting Investment Decisions

“Most people are prone to investment biases, do not diversify enough and fail to rebalance their portfolios. Robo-advisors have helped retail investors in this task. We have shown that improved diversification and rebalancing greatly enhances their performance.”

The advancement of financial technology (FinTech) has reshaped the way people access financial services, from the introduction of internet-based trading (1990s) to the growing importance of mobile apps, robo-advisors and social media. These digital innovations have removed many of the barriers preventing retail investors from participating in financial markets and this has contributed to retail investors’ appetite for investment. The recent pandemic also added to this growing appetite, with individuals suddenly left with extra time and cash. A new class of retail investors emerged, with different types of motivation and behaviour.

Strong tailwinds

In 2010, retail trading accounted for less than 10% of the total stock market trading volume. Now, however, it constitutes more than 18% of trading in the U.S.

You can now read the full whitepaper at the link below