Responses to the Securities and Exchange Commission’s request for information and comments on the use of digital engagement practices by broker-dealers and registered investment advisor firms have produced a good look at typical retail investors active on digital platforms.
The SEC asked for inputs on the use of behavioral prompts, differential marketing, game-like features or gamification, and other design elements or features aimed at engaging retail investors on digital platforms, such as websites, portals and applications, as reported. The comment period ends on October 1.
"While new technologies can bring us greater access and product choice, they also raise questions as to whether we as investors are appropriately protected when we trade and get financial advice," SEC chair Gary Gensler said in a statement about the request for information and comments.
An FA-IQ analysis of the first 1,323 comments, as of Friday last week, shows a pool of individuals active on digital platforms.
The SEC asked for information and comments on a variety of topics, including how people access their trading accounts, how they invest and how often, and their financial goals. Multiple choice answers were provided.
A website or an application is an important factor for the commenters in deciding to open an investment account. Most, or 75% of the commenters, visited a website or an application first before actually opening an account.
The ability to access investment accounts via a computer or a mobile phone is crucial in determining whether the commenters would actually invest. Most, or 70%, said they would not invest if they couldn’t do it via a computer or a mobile phone.
Most, or 59% of the commenters prefer to have both computer and mobile phone access to access their investment accounts.
Slightly more than a quarter, or 28%, of the commenters make online trades at least once a week. Slightly more than a third, or 36%, make online trades at least once a month.
The SEC also asked people why they are investing, allowing them to check as many answers as appropriate. The top answer, picked by 31% of the commenters, is to save and grow their money for the medium- and long-term. Coming in second, cited by 28%, is to preserve their money while keeping up with inflation. Eight percent are doing it to save and grow their money in the short term, which the SEC defined as “in the next year or two.” Only 11 commenters said they were doing it only to have fun.
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