Lule Demmissie: Helping Self-Directed Retail Investors Rethink Risk

Lule Demmissie, eToro US CEO will be speaking at the upcoming Benzinga Fintech Deal Day & Awards. Mark Nov. 13 on your calendar for the must-attend gathering in the fintech industry!

It’s hard to see the future in the midst of monetary tightness and geopolitical crisis. For many newer investors, this type of interest rate environment seems alien. Seen through this looking glass, it is easy to think that the retail investor has gone back to their bunker, fearful of any risk for a generation to come. When this instinct kicks in, the practitioners cannot preach the gospel of “I told you so.” When times are tough and the future looks indecipherable, that’s exactly when we need to preach the benefits of diversification and rethinking risk. 

History is a wise teacher, if we listen

The best time to tap into history’s wisdom is when we find ourselves thinking a secular trend has suddenly taken a U-turn. At the dawn of the 20th century, very few took part in the act of investing to build income or wealth. The rest of us either labored for a meager wage or none at all. In the 1930s, what we considered ‘retail’ or individual investors accounted for 5-10% of the participation in the market. This anemic level persisted until the 1980s, when it reached 40% of households in America. In the 1990s, it reached 50%, then peaked at 65% in 2007, before the onset of the Great Recession — an event that is, hopefully, a once-in-a-generation shake up that had us believing banks, the artery of our capital markets, had forever been broken. 

But history had other lessons to teach. By the end of 2009, the S&P 500 had recovered with a gain of 26% for the year. Yet the damage was done. Our financial industry’s response to that event was to put out a blaring “buyer beware” sign for the retail investor, rather than coach them in resilience and practice. We witnessed retail participation plummet to 52% in the years to follow. An entire generation of millennials and others lost years of market participation, heeding to the fearmongering gospel of ‘dumb money.’

Share of adults investing money in the stock market in the United States from 1999 to 2023

Source: eToro, Statista 2023

If not fear, what is the alternative?

However, retail investors began to come out of their shells in 2014 and beyond, in large part due to the progress powered by  technology. This was helped by the advent of smartphones; the magic of software leveraged by new entrant FinTechs; the rise of investor education and social communities; the continued lowering of barriers with zero commissions, low-cost ETFs, and robos; and the advent of fractional shares. During this resurrection, mobile apps’ share of trading on a given platform shot up from 30% in 2018 to 62% in 2020. When COVID hit, the retail investor was already ripe for engagement, as these advancements made it more possible to partake in the markets. 

But like many moments in history, we were due for a correction, and many retail and institutional investors were once again schooled by the market in 2021-2022, compounded by the long arm of monetary policy. However, corrections do not mean one should abandon the arena, and thank goodness this round of retail investors did not buy the ‘dumb money’ label. Yes, the exponential growth took a breather, but those who came to the party stayed, for the most part — unlike in 2008. 

We know that it is very difficult to create long-term savings or wealth without partaking in investing in the capital markets. This is a lived experience for me. As an immigrant and a retail investor myself, I also benefit from participation in the markets.

What made them stay?

This time around, the retail investor has a broader community, either in social media or with social investing platforms. They also have more access to investment insights and education, as well as  resilience — recognizing the difference between the skill of “risk on/risk off” investing versus outright abandonment of the markets. Retail investors are learning to be ambidextrous. They are keeping money in high interest yielding instruments, investing in ETFs and stocks, maintaining their digital assets, testing out advanced instruments like options, and much more. Let's continue to help them rethink risk and lean into the lessons of investing, education, practice through ‘virtual trading’ platforms, and — when appropriate — take risk. Practiced risk.

I’m looking forward to speaking about this and many other topics relevant to the retail investor at Benzinga’s Fintech Deal Day and Benzinga’s Future of Digital Assets Conference. Please join me.

Lule Demmissie is the US CEO of eToro, the world’s largest social investing network that empowers people to grow their knowledge and wealth as part of a global community of investors. eToro US offers individual investors easy access to investment instruments ranging from stocks to crypto, innovations like CopyTrader and more to come. Lule joined the company in September 2021, overseeing the company’s expansion and investment within the US, operational infrastructure, marketing, investment thought leadership, corporate governance, compliance, and its regulatory affairs & risk management.

Lule previously served as the President of Ally Invest overseeing the business’ P&L and growth strategy. She also led the products and services delivered to Ally Invest’s all- digital client base, shaping the end-to-end client experience.

Additionally, Lule served as the Managing Director of Investment Products & Digital Guidance at TD Ameritrade where she led the development and launch of financial guidance services, tools and products for long-term oriented retail investors. Lule has also worked for leading investment firms such as Morgan Stanley, J.P. Morgan, and Merrill Lynch. Lule Demmissie is a unicorn in the retail investing and wealth sector. As a financial executive with a range of intersectional identities, a woman of color and a member of the LGBTQ+

community, she has a perspective that is much needed (and not often represented) in the area of fintech innovation, and gives voice to financial challenges facing a variety of communities.

As a leader, Lule is committed to cultivating a culture with diverse perspectives and talents. She has been sighted by many industry publications as a formidable leader in fintech.

She was the recipient of a coveted TD Ameritrade Impact Award, a coveted annual award for leaders paving the way in building, developing and retaining a diverse group of associates — while continuing to foster a culture where all associates feel valued, included and challenged.

Lule holds a B.A. in Economics from Smith College, an M.B.A from Columbia Business School, a CIMA designation from the Investments & Wealth Institute (formerly IMCA) and the 7, 66 and 24 securities licenses.