How Financial Markets Are Becoming More Diverse: 'The Retail Investor Looks Like Me'

During the Benzinga Global Fintech Awards, a day of dealmaking, networking, and recognition in the financial technology space, Benzinga's Brent Slava presented the following discussion on the feature requirements of new retail traders.

What The Retail Investor Looks Like: Times are changing, said finance author Aaron Brown.

“You better start swimming, or you’ll sink like a stone.”

Brown suggests that markets have gone through numerous generational shifts. In the 1920s and 1930s, the “greatest generation,” investors were taught to trust the government and take no risk, he said.

In the 1970s and 1980s, investors were taught to put their trust in the markets and the financial system.

“Today, another 50 years in the future, our children and grandchildren … learned to trust neither the government or financial institutions,” Brown said.

“They trust themselves, but only in embedded networks — social networks, information networks crypto networks — and so far, their risk choices have been chaotic, from Hertz to Tesla.”

The Evolution Of Fintech: Slava then brought up the dynamic of zero-commission trading and how technology has influenced retail investing communities.

According to Raras Asan, co-founder at BREAUX Capital, retail investing trends point to a distrust of the largely antiquated financial system.

“The financial collapse occurred in 2007-2008 — I think that played into many people distrusting the overall landscape,” he said in a discussion regarding the adoption of emerging technologies and assets like decentralized finance and cryptocurrencies.

Financial services companies have taken note, said Ricky Gutierrez, a trader and social media influencer.

Gutierrez suggests platforms have improved user experiences, bringing simplicity and increased education to the space.

“We want to make sure that retention is there,” he said. “TD Ameritrade does an absolutely amazing job with their resource tools, and educating traders on ways to maneuver themselves around these platforms.”

Platforms like Robinhood and Webull make markets more accessible than before, Gutierrez said.

What To Expect In The Future: “Retail investing has always been tribal, with investors of different races, education levels and sexes acting differently,” Brown said. “This has profound implications for the cultural and political environment.”

Brown pointed to record-breaking support by minority voters for Donald Trump in the last election.

“I think, in the future, Democrats can no longer push for higher corporate investment taxes and expect 95% support from Blacks.”

BREAUX Capital’s other co-founder, Derrius Quarles, added to Brown’s statements and noted an increased presence and engagement by minority investors.

“Over the next five years, the retail investor looks like me,” he said.

“Black people are looking to get into this marketplace. More women are certainly looking to make their presence felt and heard.”

To learn more, visit bzawards.com. Complete results for the Benzinga Fintech Awards, including company profiles and an interactive database, can be found here.