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Close to the Madding Crowd

Retail investors now own roughly 14% of the S&P 500—up from 11% two years ago. With a surge of new shareholders, recent research from Brunswick shows how companies can connect with their evolving ownership base.

Retail investors are easier to caricature than categorize. It was retail investors who famously powered GameStop’s stratospheric rise—at the start of January 2021, the company’s share price was $19; it ended the month at $325—just as they fueled the share-price spikes of other “meme stocks.” These sensational stories of extreme profit, and more recently extreme loss, paint a picture of retail investors that is dramatic—and according to research from Brunswick Group, misleading.

Our analysis finds this stereotype-defying group to be growing in importance: retail investors averaged 13.9% of ownership in S&P 500 companies in Q1 2022, compared with only two years earlier. What does this mean for US companies, exactly?

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To find out, Brunswick surveyed 1,000 retail investors across the US; the youngest was 18 years old, the oldest was 85 but all hold a minimum of $10,000 in invested assets (excluding their homes). The research probed to understand where retail investors stash their cash, how they consume relevant information, and ultimately what influences their decision to buy or sell.

But the rise of retail investors, in one sense, is welcome news for US businesses who are seeking shareholder support against a new wave of shareholder challenges at their annual meetings. Retail investors are commonly “friends” of management in the sense that they are much less likely than their institutional co-owners to show up on voting day. Recent research from Broadridge and PwC show retail investors voted only on 30% of the shares they owned in 2021 while institutional investors voted 83% of their shares.

That may change. AGMs are becoming increasingly digitized, while online trading platforms are making it easier for retail investors to participate in these AGMs. Some have noted that the low voting rate among retail investors represents an opportunity for companies to increase engagement among a generally sympathetic cohort of shareholders. But increased engagement might also bear some risk: as evidenced recently when AMC Entertainment CEO Adam Aron remarked retail investor social media posts are “laced with hostility, threats.”

We found a wide disparity in investor types; some differences expected and some not. Predictably we see divides between younger and older investors. Roughly 42% of young investors are currently investing in cryptocurrency, whereas only 5% of seniors have exposure. Somewhat surprisingly, younger investors are more likely to allocate a larger portion of their portfolio to cash relative to equities—perhaps as their capital requirements dictate.

But how does a company think about, let alone engage with, retail investors—what strategy speaks to both a young professional new to the market and a retiree managing a multimillion-dollar portfolio?

“There is always a well-known solution to every complex problem—neat, plausible, and wrong,” the acerbic journalist H. L. Mencken wrote in 1920. It’s worth bearing in mind as companies think about engaging with retail investors: the right strategy will necessarily vary by company. Yet our research highlights three areas in which retail investors are in broad agreement, and offer tangible steps that companies can begin to take:

1. Provide simple, accessible, and frequently updated information

Current company efforts to communicate with retail investors are good, not great. While over 90% of US retail investors are somewhat satisfied with how companies communicate, that satisfaction is lukewarm—67% reported being “somewhat” satisfied, while only 23% were “very” satisfied.


To standout companies should, according to a strong majority of investors, focus on two areas in particular: show simplified financial information (86%), and frequently update their corporate website (71%). When it came to features on a company’s website, investors noted the importance of a thoughtfully produced retail-investor FAQ section, and also valued having a retail-investor dedicated point of contact.

Integrating social media into investor relations websites can pay dividends. Brunswick’s analysis of S&P 500 companies shows that IR websites with at least one linked social media platform maintain an ownership structure with an additional 2% of retail investors. You can debate causation or correlation, but it appears retail investor communication effort is aligned with ownership interest.

2. Retail investors seek credible information sources but are mixed on whom to trust

We found 67% of retail investors indicate that trustworthy sources are most likely to impact their buying and selling decisions. Consequently, retail investors rely heavily on financial advisor or planners (55%)—interestingly, about the same percentage (52%) depend on financial news media.

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That said, retail investors’ trust in financial news media ranked as their fourth-most trusted source of information, perhaps suggesting that business-page credibility has been a casualty of political rants about “fake news.” Those that trust financial media appear to be the most knowable swaths of retail investors whereas less aware individuals are most likely to distrust what they hear.


3. The near- and long-term opportunity: Education

Only 20% of US retail investors feel they understand financial markets, and fewer than four in 10 feel confident in their investment decisions. A majority (55%) believe financial education enables investment, and nearly 40% said they would invest more if they had better information.


Education as a fulcrum for investment, or risk taking at all, is consistently supported throughout our findings. When we asked retail investors to build a hypothetical portfolio, knowledge level and appetite for equity exposure went hand in hand.

It’s been easy for retail investors to fall through the cracks in a company’s communications—investor relations typically focus on institutional investors, while corporate communications covers remaining stakeholders. Yet retail investors’ growing footprint means it’s time for companies to identify a spokesperson to programmatically engage with these investors, and to determine what messages to deliver, and how. Doing so creates the possibility of widening the base of shareholders who support your long-term vision and strategy.

Geoff Serednesky is a Director with Brunswick Insight in Chicago specializing in using insights-based approaches to guide financial and corporate communication decisions. He previously led FTI Consulting’s capital markets research offering. 

Karoline Von Tschurtschenthaler, a Data Visualization Analyst in New York, helped with charts and graphics.