20220803-世界经济论坛-The_Future_of_Capital_Markets_Democratization_of_Retail_Investing_95页_6mb

The Future of Capital Markets: Democratization of Retail Investing

Key Findings

Retail investing has experienced a dramatic surge, particularly in recent years, due to factors including market growth opportunities, technological advancements, low interest rates, and changes in retirement plans. Younger investors, especially Millennials and Gen-Z, are leading this trend.

However, despite this growth, many individuals globally remain financially excluded due to barriers such as low financial literacy, limited access to investment products, trust issues, and lack of infrastructure in certain geographic regions.

Three key pillars have been identified as crucial in democratizing retail investing: Access, Education, and Trust.

Access

While new platforms have eased entry for many, existing products remain inaccessible due to high entry requirements or geographical barriers. Many investors in emerging markets still have fragmented or limited access to reliable investment tools.

Addressing these gaps requires collaboration between incumbents and local platforms to provide affordable education, simplify user interfaces, and ensure multilingual platforms.

Education

Financial literacy is a significant barrier preventing investment participation. Most people lack adequate understanding of investment products, risk, and wealth planning.

Industry must commit to embedding financial education through:

• Accurate, simplified communications
• Increased human and digital advice tailored to local contexts
• Use of gamification and digital platforms for engagement

Trust

Trust has suffered in the wake of market volatility and regulatory ambiguity. Over 70% of US respondents believe that regulators have not kept pace with market innovations like cryptocurrency.

Rebuilding trust requires clearer processes and frameworks for due diligence, data handling, fraud prevention, and education. Collaboration between industry, regulators, and NGOs is essential.

Disparities by Region

Developed Markets

• Higher financial literacy rates but lower trust in institutions (e.g., US bank trust at 33%).
• Greater access but reliance on traditional platforms may limit innovation uptake.

Emerging Markets

• Fragmented brokerage markets and platform availability pose challenges for coordination and access.
• Higher willingness to trust traditional banks (e.g., 74% in Brazil) but lower trust in modern platforms.

Emerging Trends

Alternative investments are gaining mainstream reach (e.g., fractional shares, cryptocurrencies), with global assets in direct indexing expected to grow by at least 12% over five years.

Crypto saw explosive growth post-COVID, integrating with traditional finance but lacking stable regulatory frameworks.

Social media is a primary source for investment information among younger investors but requires greater scrutiny for quality.

Industry, Partnerships and Action Plan

The industry must adopt a collaborative, ecosystem-wide approach, with actions including standardized consumer education, simplified offerings across income levels, and linkage between regulation and innovation.

Steps being taken:

• Industry stakeholders were surveyed across nine countries (Brazil, China, South Africa, UAE, UK, US, France, Germany, Japan) to gather insights on retail attitudes and expectations.
• Actions recommended include harmonised regulation for cross-border services, expansion of multilingual financial education programs, and development of tools for outcome-oriented investing.

Calls to Action

Addressing the challenges and leveraging the opportunities in retail investing requires concrete action:

• Financial Institutions and Exchanges: Invest in infrastructure capacity to support growing volumes and update risk management frameworks.
• Policy Makers: Align regulations with current market mechanics (e.g., cryptocurrency).
• NGOs/Think Tanks: Standardize educational content and oversee ethical practices.

Industry must act decisively to foster a responsible, inclusive ecosystem wherein retail investors feel informed, equipped, and confident to participate.