The needs and trends of retail investors at large

At the RETAIL BROKER SUMMIT in Toronto, hosted annually by Recognia (a TRADING CENTRAL company) I listened in on a panel discussion with key industry veterans that are close to the needs and trends of retail investors at large. The distinguished panel included:

John See, Vice Chairman, TD Wealth and Board member at Recognia (MODERATOR)

Theresa Carey, Contributing Editor, Barron’s Magazine

Rob Carrick, Commentator, The Globe and Mail

Michael Ellison, President, Corporate Insight


Fearful U.S. and Canadian investors sitting on cash. This presents tremendous challenges and opportunities. 

Improved trading feedback and new tools to spark ideas could be key differentiators in self-directed channel. 

High student debt loads and a tepid economy making it difficult to reach Millennials. 

Brokers choosing to ignore robo-advice channel do so at their own peril. 

In Canada, robo-advisors face significant hurdles to acceptance


There has been no shortage of innovations and improvements in the digital retail broker space. That said, there is still an abundance of cash on the sidelines, especially after the financial crisis of 2008 that created a profound level of distrust among many investors.

While investor confidence has been building over the past few years...

Rob Carrick  noted that poor market performance in 2015, especially in Canada, has resulted in a “stunningly high amount” of cash sitting dormant in investors’ accounts – “cash that should and needs to be invested.”

While the U.S. has experienced higher levels of investor engagement, thanks in part to gains posted by the S&P 500 Index, Carey noted that many of her readers – predominantly affluent, active traders – are still holding higher amounts of cash (20% vs. previous levels of around 5%).

Theresa Carey added that many of her readers are looking for other income-generating opportunities in a zero-interest-rate environment, including covered calls and options strategies.


With many retail brokers approaching parity in terms of pricing and quality of financial research, the question has become: What key differentiators are investors looking for in an online broker?

According to Carey, many traders want improved feedback on their investment strategies and trades – beyond simple statements of realized losses and gains.

Picture credit: One of the presentations by Recognia "in the labs". Ask me more about this.

Whether it’s length of holding or particular options strategies, investors want to want to know what works – and what doesn’t – and to then adjust accordingly.

Carey also spoke about tools designed to spark new investment ideas, which highlight how brokers can use education as a way to draw investors into new asset classes or strategies.

Picture credit: One of the presentations by Recognia "in the labs". Ask me more about this.

Also highlighted was the emergence of new communications tools to help protect investors from disastrous decision-making during market downturns or corrections. By proactively reaching out to investors, many self-directed broker channels are able to calm investors’ fears, while also protecting their assets under management.

While pricing parity has increased, Ellison noted that fee transparency remains a key concern for many investors, adding that the transparency provided by many emerging robo-advisors might entice investors back into the markets.


When it comes to engaging Millennials in the self-directed channel, key challenges remain, including high levels of student debt and a sluggish economy that has failed to provide employment opportunities to new graduates. Carrick noted that Millennials may be more focused on the housing market, which many see as a more attractive investment option given skyrocketing prices in major Canadian markets.

Although many robo-advisors have specifically targeted Millennials as a result of their willingness to adopt new technologies, Ellison believes that robo-advice is more of a mainstream phenomenon, pointing to recent successes in the U.S. by both Schwab and Vanguard.


Is robo-advice a distinct, separate channel or simply another part of the wealth management continuum?

In the U.S.,   Michael Ellison sees robo-advice as an integral part of the bigger investment picture and a great way to get new investors in the door.

Traditional full-service brokers would be well advised to see this emerging channel as an opportunity to build their client base, above and beyond simple wealth management.

Picture credit to NMG Group showing Robo Advice address part of the spectrum of advisory services

 In Canada, however, Carrick notes the robo-advice phenomenon is still five to 10 years behind the U.S. and has gained precious little traction with investors. While acknowledging that there’s certainly a place for robo-advisors in the industry, Carrick noted that, in Canada, many of the emerging robo companies are independents with no track record and little-to-no name recognition. With Canadians so predisposed to dealing with big financial names, robo-advisors may face significant hurdles in getting investors to open accounts, regardless of their value proposition.

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