Online trading: How to build trust with retail investors

A fascinating trend to emerge from the last 18 months of global lockdowns has been the rise of so-called ‘retail traders’ – a demographic of, generally, untrained amateur investors bringing a fresh enthusiasm and energy to the online trading market thanks largely to the democratisation of market trading opportunities facilitated by new trading platforms and easily accessible apps.

After what began as an additional pass-time to get through lockdown after lockdown, recent optimism about the global economic outlook has largely been triggered by the successful roll-out of the COVID-19 vaccine; retail investors seem to share the belief that 2021 is the year for a rebound of the global economy. As a result, so far this year retail investors have shown a willingness to back a variety of stocks that professional fund managers were not prepared to go near. So much so in fact, that professionals have often gone on record to label retail traders as naïve and predict a significant drop off the next time markets experience a dip.

While there has been some churn in these new traders (for instance Trading212 have reported a ~46% attrition rate) amateur traders are still on the rise this year. According to data from Credit Suisse, retail traders have accounted for a third of all US stock market trading at various points this year. Other data has revealed 29% of traders in the UK are now 35 years old or younger (the millennial demographic) – a significant rise from 19% in 2020.

This poses a challenge for traditional trading platforms, who maintain that trading is the domain of the informed, ambitious and affluent, but now face a threat to their market share by new providers who are democratising trading and lowering the barriers to entry for these new investors.

It is clear therefore that trading platforms – both traditional and new – face a battle to win the trust and custom of an ever-growing group of younger retail investors who are shaping up to be the future customer changing the very meaning of what a ‘typical trader’ really is. Not to mention the negative media perception of the trading industry – often portraying trading platforms as risky and irresponsible – coupled with the GameStop saga which raised serious questions about the gamification of, and easy access to, trading to the uninformed and inexperienced. So how can an effective PR strategy help trading brands win the trust of retail investors in this ever-changing landscape?

Establish a regular media presence
First of all, give yourself a platform in the media. Public perception is paramount for a brand looking to attract new users / customers, and you can begin to influence how your brand is perceived by crafting your message through the press.

For an industry like trading, which is often on the receiving end of ‘bad press’ or disgruntled customers taking to public forums to vent (which can drag your name through the mud), being in control of your brand narrative in the media is important so you can positively steer it in the right direction and communicate the right messages to the right people.

Achieving a regular media presence can take time, but the more a potential customer is exposed to positive press coverage about your brand, the more they will begin to trust you over others.

Build and protect your reputation
Particularly pertinent for established trading brands who are fighting to cling on to their market share under threat from new entrants, it’s as important to build your brand reputation for the future as it is to focus on the here and now.

There is no doubt the increase in younger retail investors trying their hand in trading is shaping the new ‘customer of the future’ and established players must be prepared to pivot in order to remain an attractive option for a millennial demographic that now makes up nearly a third of all traders in the UK.

Innovation in fintech requires even the most traditional brands to remain nimble and fleet of foot, and through your communications strategy you can build a reputation as a forward-thinking, innovative, diverse and accessible brand without having to relinquish any of the traits that made you successful in the first place.

Equally, at a time when there has never been more media attention on the trading industry, it’s important to have a watertight reputation management strategy in place to avoid getting dragged into negative stories and subsequently denting trust with retail investors. Trading has been impacted by all sorts of factors – from the long-term impact of Brexit, to growing cryptocurrency crazes – and to stay on the right side of the story you should plan ahead and be clear on your messages and stance on the big topics affecting your industry.

Become a trusted authority
A tried and tested way of proactively building trust through the media is to establish your brand as a leading authority or ‘go-to’ expert. We regularly position our clients as thought leaders and expert commentors by plugging them into the news agenda with punchy opinions that cut through and grab the attention of readers.

At the heart of your communications strategy should be regular flow of long-form articles and expert commentary on the big topics affecting the trading landscape. Think about the messages you want to portray to retail investors and what their key takeaways about your brand should be as a result. To be trusted ahead of other players in the market you need a regular media presence portraying you as well-informed, educated and responsible.

Prove that it works
Trading has become and unbelievably crowded landscape, and it can be complex and difficult for new traders to differentiate between the best options on the market.

From experience of working with brands looking to win over new consumers, it is one thing to be able to explain your product offering in theory, but it’s far more compelling to tell human-interest stories which demonstrate significant and effective customer adoption. Finding proof that like-minded people have had success with your platform is invaluable PR collateral. Case studies and human interest stories make for credible and engaging content – your spokesperson being able to describe real examples of your brand’s impact on people’s lives enlivens and brings integrity to otherwise somewhat bold and intangible claims. Think about how you can use real-life success stories to appeal to retail investors those who aren’t especially educated about cloud trading and its intricacies. Timing is everything when it comes to a good story, and now is the time to leverage those positive customer experiences to get ahead in a market that continues to accelerate at pace.

Get in touch with the team