Targeted Musings on Financial Marketing

Connecting with Retail Investors: a Primer

09 Jan 2020

Although retail investors may not be the most sophisticated target audience, ETF issuers sometimes ignore this important slice of the investing public at their peril. By some estimates, there are at least 50 million retail investor households in the United States, while roughly half of all workers have some form of investment savings account such as a 401 (k). Clearly there is a wide and deep pool of potential assets that ETF issuers can tap into, but how do they reach them?

Be sure to also check out our guide for Connecting with Financial Professionals using Content Marketing


Go where the eyeballs are

Many retail investors may rarely if ever interact with specifically finance-focused publications, so it’s key to catch them where they do get the news. Retail investors are probably not reading ETF-centric publications, and certainly aren’t reading financial advisor-targeted outlets either. Most retail investors get their news from broader sources, or through social media. Although getting compliance approval for communicating through social media can be an onerous and difficult process, the value of reaching retail investors directly cannot be overstated.


Grab your audience

It’s not that retail investors have especially short attention spans, it’s just that it’s crucial to get them interested as quickly as possible if you’re hoping to communicate anything substantive about an investment product. In other words: there is no time to waste. Retail investors may never even make it to the most important part of your content if you lose them within the first few sentences. Whether in videos or blog articles, good old-fashioned thought-provoking hooks or cliff-hangers are a good way to grab a retail investor’s attention. Follow it up with some juicy pieces of information and they’ll likely be hooked.


Transition from simple to complex concepts

Especially when it comes to more of the non-traditional investment products such as smart beta, fixed income, or other more unusual thematic ETFs, it’s important to not take any basic financial literacy for granted. It’s important in these cases to take a “building block” approach to creating content for retail investors, starting with simple, basic concepts and using those to build up to the more sophisticated portions of the piece in question. This building block approach is crucial if you wish to avoid frustrating or alienating retail investors, who may have only the barest grasp of ETF fundamentals, and are quick to turn off or disengage when confronted with a wall of financial jargon that doesn’t make sense to them.


Connect concrete goals to abstract financial concepts

Why do we invest? Every investor has different goals, but—in keeping with the “building block” approach mentioned above—it makes intuitive sense to connect these concrete goals, such as saving for college or retirement, or buying a house, to abstract financial concepts such as smart beta, active management, or risk/return profiles. The ultimate value proposition of any investment product is that it will help an investor achieve their individual investment goals. By connecting these goals to abstract concepts, and, in turn, to the financial product itself, asset managers stand a much better chance of connecting with retail investors and converting vague interest into an actual investment.


The bottom line

Retail investors are the biggest slice of the investing public. Although they may not be intimately familiar with complex financial concepts, ETF issuers ignore this group at their peril. By defining terms, hooking the audience, and connecting concrete goals to abstract concepts, asset managers stand a better chance of successfully engaging with this important demographic and growing AUM.