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BLOG. 2 min read

Attracting, Retaining and Engaging Retail Investors

The past two years have been challenging for the asset management industry—global socio-economic issues paired with rampant inflation and high-interest rate environments have resulted in a steady decline in asset flows. Retail investors can be a significant revenue diversification strategy, as retail investors are more likely to invest in stocks, bonds, mutual funds and other asset classes over the long term.

Asset managers must consider what value they can offer investors through enhanced services. Retail investors tend to have high expectations for digitally-enabled engagement. Tools like digital portals and electronic identification and verification (e-ID&V) provide a secure platform on which investors can quickly access information related to their investments with minimal effort or disruption. Digitized engagement can allow investors greater insight into how they might achieve their financial goals. By focusing on developing relationships with retail investors through regular communication such as newsletters or emails, asset managers will be able to build trust and demonstrate their commitment to customer service. Asset managers should also consider how digital tools that improve reporting on investment strategies, performance and risk can give investors greater transparency and help them meet mandates.

Third-party legacy platforms to facilitate digital engagement, while historically popular among asset managers, are becoming increasingly unattractive due to their fees and lack of control over relationships with investors. Asset managers have realized that it puts them at a disadvantage when fees are passed down to the investor, prompting many to shift towards a direct-to-consumer (D2C) approach via white-labeled platform providers. The D2C model allows asset managers to directly interact with investors and build deeper relationships than can be achieved through third-party platforms. It also eliminates any additional costs associated with third-party fees, allowing more competitive pricing for retail investors.

Even for those managers who choose not to change from intermediated channels they already use and switch to a D2C platform, there are other ways to differentiate themselves to investors through enhanced information flows on a timelier basis. Integrating the advisor investment platforms into the asset manager’s reporting systems is a critical step.

In order to effectively support retail investors, asset managers must work with service providers with a proven track record in dealing with high volumes of trading activity and investor queries. In addition, asset managers must ensure that their service provider is up-to-date with relevant regulations and has the capability to monitor trades for potential market abuse or insider trading. A good provider should also deliver detailed analytics and reporting, as well as the ability to run model portfolios across a range of asset classes to ensure there are efficient straight-through processes to construct and rebalance those models, which ultimately increases the value of the assets that managers are seeking to grow.

SS&C’s technology and service capabilities support asset managers, enhancing their distribution strategy and allowing them to expose their funds to direct retail investors, advisors and IFAs. SS&C Hubwise is a fully white-labeled, outsourced investment platform that supports multiple products such as ISA, JISA, GIA and SIPP. SS&C Hubwise relieves the operational burden of running an investment platform and allows you to focus on building bespoke investment products. When combined with our core transfer agency proposition and consolidated reporting across our services, Hubwise allows for easy maintenance of a Primary Register and Sub-register, as well as the operational management information needed for effective oversight of their outsourced operation. SS&C Hubwise supports a market-leading white-labeled digital front-end interface for investors and advisors. Additionally, it is backed by a rich set of APIs, allowing asset managers to choose to deliver their own digital experience. To learn more about how SS&C can help you attract, retain and engage retail investors, contact us to request more information.

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