Investment Trends

The Rise Of The Retail Investor

How new regulation, and new fintech protocols, will transform Europe’s ‘democratization of corporate governance’

Top trends driving the rise of the retail investor in Europe highlighted in new Broadridge whitepaper. View the full whitepaper here.

NEW YORK and LONDON, Feb. 10, 2022 /PRNewswire/ — A new whitepaper focused on the growth of retail investment in Europe, and the corresponding need for financial intermediaries to reappraise how they service the increased corporate governance requirements of the retail investor, was released today by Broadridge Financial Solutions (NYSE: BR), a global Fintech leader.

The whitepaper, titled The Rise of the Retail Investor, assesses the European regulatory agenda and the continued roll-out of the Capital Markets Union that reinforces the objective for a more engaged and empowered retail investor community. It highlights specific regulatory drivers, such as the Shareholder Rights Directive (SRD II), that mandated financial intermediaries – including banks, brokers and wealth managers – to provide voting solutions to their underlying retail investors for the first time. It explores how these retail investors, together with social media, can potentially influence meeting outcomes around topical issues like director remuneration, climate change and the ESG policies adopted by issuers and asset managers.

“Some of the world’s leading banks and brokers have recognized the importance of regulatory and social change impacting their business and many have stepped up their investor communications product offerings, with the most advanced now looking at ways to incorporate ESG sentiment from their mutual fund holders,” said Demi Derem, General Manager, International Bank Broker-Dealer Communication Solutions at Broadridge. “We have witnessed a strong demand for our ESG-focused retail voting solutions and this whitepaper highlights how the industry is managing the implementation of the rising standards in corporate governance communications. The whitepaper also examines how some firms are looking over the industry horizon, to build brand reputation and trust, while leveraging Fintech innovation to achieve best-in-class compliance and strengthen their core service propositions against their peers.”

The Need For Greater Engagement

The demand from retail investors for access to the basic services provided to their institutional counterparts is
only likely to grow over time as digital and social channels increase their influence on this community. Social channels are frequently used by the public to provide feedback to companies and to air complaints, and these channels have become increasingly influential on capital markets due to the introduction of sentiment analytics that feed into trading strategies. Share prices can rise and fall based on a single tweet. Discussions within an online community such as Reddit can also cause retail investors to buy certain shares en masse.

Retail investors need better access to shareholder communications, corporate management and share offering information, and digital channels are the perfect way to supplement traditional methods of information delivery in a cost-efficient manner. The European Commission is also keen to improve financial literacy across the EU as part of the CMU, and investor engagement is a key part of this strategy.

The Impact Of Fintech On Governance

If retail investors are to become a larger part of the European market as companies build a more diversified investor base against the tide of passive investment strategies, these individuals need to have access to the voting capabilities of their institutional counterparts. Online annual general meetings (AGMs) throughout the pandemic have enabled a greater number of investors to participate in governance processes than ever before. The good news is that the technology is now available and proven to support both communication and voting processes for the retail investor community.

Some of the world's leading banks and brokers have recognized the importance of regulatory and social change impacting their business and many have stepped up their investor communications product offerings, with the most advanced now looking at ways to incorporate ESG sentiment from their mutual fund holders...

Regularly engaged shareholders tend to have more loyalty and feel less disenfranchised than those that have limited contact with the issuer. By offering voting capabilities—as mandated under SRD II—brokers, banks, wealth managers and other intermediaries will no longer represent a barrier to these retail investors. Given that the pandemic has also fostered a “work from anywhere” approach in many industries, mobile enablement is a key factor in the deployment of this technology, especially for younger investors.

Retail investors should be able to access a baseline of information on the company and be able to vote from anywhere. A seamless user experience across various devices is table stakes for financial institutions offering retail investor support, including consistent and frictionless support for shareholder voting across the markets in Europe and beyond.

These capabilities necessitate a secure and reliable technology platform that provides easy access to data from multiple sources to the end investor. The use of application programming interfaces (APIs) to deliver this data in an on-demand manner will allow issuers and intermediaries to provide the required information transparency. Bear in mind that the way in which retail investors receive information prior to their voting can have a significant impact on their engagement—keep it simple and electronically delivered.

The Benefits Of Partnering With A Fintech

Fintech innovations in technology and digital communications are already supporting the empowerment of retail shareholders in Europe through the provision of efficient, cost- effective solutions that are delivered through a mutualised, shared cost service for the industry.

Building from the requirements of SRD II, firms will need to support voting processes across all of the impacted European markets in a consistent manner. They will need to make the experience as frictionless and seamless as possible for their investor client base. This means working with partners such as Broadridge to provide mobile-enabled portals and e-delivery investor communications for online voting—let us worry about the back-end and the APIs, and enable a simple and easy-to- use client experience.



About Broadridge
Broadridge Financial Solutions (NYSE: BR), a global Fintech leader with $5 billion in revenues, provides the critical infrastructure that powers investing, corporate governance, and communications to enable better financial lives. We deliver technology-driven solutions that drive business transformation for banks, broker-dealers, asset and wealth managers and public companies. Broadridge’s infrastructure serves as a global communications hub enabling corporate governance by linking thousands of public companies and mutual funds to tens of millions of individual and institutional investors around the world. Our technology and operations platforms underpin the daily trading of more than U.S. $9 trillion of equities, fixed income and other securities globally. A certified Great Place to Work®, Broadridge is part of the S&P 500® Index, employing over 13,000 associates in 21 countries. For more information about us please visit