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Comparison Exposes A Crisis. 

The surge in stock ownership among Americans, reaching a historic high of approximately 58% of U.S. households in 2022, is closely tied to the unique dynamics of the covid-19 era. The Federal Reserve’s survey of consumer finances highlights that the widespread adoption of stock ownership is, in part, a consequence of the pandemic-induced lockdowns, which left many individuals with extra cash and increased leisure time. Coupled with the elimination of commission fees on stock trading across U.S. brokerages, these factors made investing more accessible and affordable than ever. The data reveals that millions of Americans, finding themselves stuck at home during the pandemic, seized the opportunity to enter the stock market for the first time, marking a significant shift in the investment landscape.

Furthermore, the survey underscores the democratisation of stock ownership, as it indicates a notable increase in direct stock ownership, rising from 15% in 2019 to 21% in 2022—the largest such surge recorded since the survey’s initiation in 1989. This shift is attributed to newer entrants investing in individual shares directly, with platforms like Robinhood and Webull playing a pivotal role in popularising zero-commission stock trading on smartphones. The ease of use and accessibility provided by these apps, along with the broader industry trend of brokerages eliminating commission fees, have contributed to a wave of individuals venturing into the stock market with smaller sums of money. Notably, even as the median value of direct stockholdings nearly halved from 2019 to about $15,000 in 2022 (adjusted for inflation), the number of households owning stocks increased across all income levels, indicating a broadening participation in the stock market across socioeconomic groups.

The UK financial markets finds itself at a juncture where it has missed a significant opportunity to capitalise on the global surge in retail investment witnessed in recent years. The Square Mile has a traditional mainstream and institutional mindset, its head is stuck in the 1990’s. Unlike the Americans, the UK financial sector has struggled to attract retail capital, and one of the primary culprits appears to be a lack of adeptness in navigating the social media landscape, particularly in connecting with millions of millennials and Generation Z. While the U.S. experienced a historic high with approximately 58% of households owning stocks in 2022, the equity ownership landscape in the UK remains at ultra-low levels. 

13% of UK households own UK shares.

39% of U.S households own U.S shares

The failure to adapt to the changing dynamics of retail investing, coupled with a limited understanding of social media’s influence on investment decisions, has hindered the UK market’s ability to tap into the burgeoning interest in stock ownership. As a result, the UK lags behind in harnessing the potential capital influx that a thriving retail investor base could bring, highlighting the urgent need for the financial sector to reassess its strategies and bridge the gap between traditional finance and the preferences of the younger demographic.

We Embrace U.S Tactics. 

Sociables Express strategically employs American and Wall Street tactics to target retail investors, recognising that the UK financial sector has faltered in attracting retail capital due to its limited understanding of social media dynamics, especially in reaching millions of millennials and Generation Z. The surge in stock ownership among Americans has been significantly fuelled by the omnipresence of social media platforms. During the COVID-19 pandemic, as individuals found themselves with extra time and resources, the digital access to markets coincided with a surge in online discussions and communities on platforms like Reddit and Twitter. These platforms became virtual hubs for sharing investment tips, discussing stock picks, and fostering a sense of camaraderie among retail investors.

Sociables Express leverages American and Wall Street tactics, in part, to navigate this evolving landscape, understanding that social media is not merely a means of communication but a powerful influencer of investment decisions. Digital finance and social media both hold the power to take down a bank very quickly, as we witnessed with the recent regional banking crisis. Platforms like Robinhood, heralded for its user-friendly interface and commission-free trading, gained immense popularity, attracting a younger demographic eager to engage in the stock market. The firm recognises that social media has become a significant force in shaping investment behaviours, and by adopting strategies rooted in the American financial landscape, Sociables Express effectively taps into this digital realm. This approach provides clients with a distinct advantage over their co-listed peers in the UK market, aligning the firm’s practices with the preferences and behaviours of retail investor demographic and offering value through targeted engagement in the social media-driven investment landscape.

In light of the transformative landscape shaped by a surge in retail investment and the pivotal role of social media, both pre-IPO and listed companies, as well as those engaged in investor relations, should proactively embrace this new era to maximise their engagement with UK retail investors. Understanding the changing dynamics and preferences of retail investors is crucial for success in this evolving financial landscape. Sociables Express stands at the forefront, offering tailored strategies rooted in American and Wall Street tactics to effectively target UK retail investors through the channels that matter most to them. Companies seeking to navigate this new world and optimise their approach to investor relations can benefit from Sociables Express’s expertise in leveraging social media and capturing the attention of millennials and Generation Z. Interested parties are encouraged to contact us for further insights and guidance on how to thrive in the dynamic realm of UK retail investor engagement. / Mike Cosgrove 07481760280

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