7 Best Practices for Retail Investor Communication You Cannot Ignore

Retail investment can bring benefits for issuers, investors and the economy as a whole. This is why bodies such as the Council of the European Union and the UK’s House of Lords are championing its cause. Here are some examples of the gains available:

• Investors can build personal wealth in a more effective manner than relying on the slow growth of interest on cash savings
• Issuers gain a broader investor base, diversifying ownership, increasing liquidity and enhancing their visibility on the markets
• The economy gains through the development of a more inclusive and resilient financial system that drives innovation and growth.

Those individual shareholders entering the markets are shifting the demographics of what companies might perceive to be a ‘traditional’ investor. The World Economic Forum’s (WEF) 2024 Global Retail Investor Outlook found that the new wave of retail investors “are becoming increasingly diverse across age, geography, gender and income. They are demonstrating an earlier and heightened interest in capital markets, and are eager to explore a broader range of asset classes.”

The report found that the majority of retail investors are Millennials, aged between 28 and 43, with strong and growing representation from Gen Z (18 – 27-year-olds). This skew towards younger investors is, according to WEF, at least in part due to the “great wealth transfer…bringing more digitally empowered younger generations” into the investment landscape. This is behind the projected 20% growth in stock trading app users between 2016 and 2025, as well as the fact that global assets under management attributable to retail investment channels are expected to reach 61% of total by 2030.

This demonstrates why you need to engage individual investors and consider the ways in which you should adjust your outreach strategy to meet their needs and speak to them in a clear, consistent manner that builds trust and lays the foundation for a long-term relationship. This article outlines best practices for retail investor communication.

7 best practices for retail investor communication

Use plain language

Your institutional investors are well-versed in the often complex language of the investment world, dealing with it as they do on a daily basis. However, retail investors do not necessarily have the time or inclination to wade through reams of jargon to try and understand what you are talking about in your communications.

In a 2023 survey of French retail investors who had entered the market in 2020 by the Organisation for Economic Co-Operation and Development (OECD), one of the key expectations of respondents was for issuers to use accessible and transparent communication, avoiding technical language.

Consider how you can distill complex information into easily digestible material which will engage your individual shareholders.

Provide timely and consistent updates

Maintain regular communication with retail investors to keep them in the loop and display a commitment to interaction. Where there is a vacuum in news flowing from the issuer, other sources can fill the gap with inaccurate, and sometimes purposefully misleading, information.

The European Capital Markets Institute (ECMI) reports that many retail investors seek investment advice on social media and this can cause issues with misinformation, the creation of echo chambers and the inadvertent sharing of outdated news that is not to the benefit of the investor. You, as the issuer, must maintain a steady stream of accurate and useful information that keeps your individual investors well-informed.

Create a clear communications calendar and stick to it so that individuals do not go elsewhere to find out what is happening.

Optimise your IR website

Because of the risk of outside influences potentially feeding misinformation to retail investors, ensure that your IR website is a single source of truth for information on your company and its financial instruments.

Keep it up-to-date and ensure that all of the key information is available and easy to find when your investors land on the site. Ensure it is mobile-friendly, given the likelihood that your private investors will access it on a smartphone. Indeed, in 2017, 36 million retail investors used a smartphone to trade securities, rising to 130 million by 2021, according to ECMI.

Highlight your regulatory disclosures, latest news, published reports and add a widget to show your share price on the homepage. For example, My Share Price Live allows your investors to access more than 200 data points on a user-friendly interface, helping them find the information they need with ease.

Use multimedia formats

Consider different ways of engaging your retail investors other than through standard written emails and blogs. The WEF shows that many individual shareholders are from digital-first generations and are used to gleaning important information from a range of innovative multimedia formats.

Here are some engaging formats you could use:

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Tailor content to retail needs

It is not just how you deliver your messaging to retail investors that matters. You should also look at the content of that messaging. This requires you to research your individual shareholders and understand their motivations and goals.

Such an approach will help you adjust your outreach so that it speaks to them directly. For example, Morgan Stanley found that more than half of retail investors planned to increase their allocations to sustainable investments. This could provide an angle to gain the attention of private shareholders.

Highlight key takeaways on topics that interest your retail audience, including the answers to frequently asked questions that you receive. This creates a handy guide that helps them understand complex areas of the business and informs their investment decisions.

Be transparent during uncertainty

Many retail investors are part of investment forums and apps, meaning they will become aware of periods of uncertainty for your business and the market in general. This means you cannot hide away from discussing difficult topics. Indeed, you need to be proactive and transparent to take control of the narrative and inspire trust and confidence.

Acknowledge the challenges that you face and share your plan of action to weather the storm and come out of the other side stronger.

The OECD report found that French retail investors were concerned that the sheer wealth of information about investments was overwhelming and it was difficult to assess which was reliable. This is why you should position yourself as a truthful source of information, even when that information is less-than-positive.

Monitor and respond to feedback

Another finding of the OECD study in France was that they felt the communication from many issuers was ‘top-down’, rather than interactive. They considered the messaging to be more about the company making proclamations rather than genuinely engaging them. The interviewees wanted the ability to enter into a dialogue about the content, asking questions to clarify what they didn’t understand.

With individual investors, it is important to understand that they may have some knowledge gaps and, therefore, their feedback is helpful in serving them effectively. Monitor the feedback that you receive from investors and respond to them with helpful answers, even if that is to direct them to your FAQs or a knowledge base on your IR website. 

Carry out investor perception studies to understand how the market views your business, taking action on the findings.

Choosing the right platform for retail investor engagement

When hosting interactive webcasts for retail investors, the platform you choose matters. Free video conferencing tools like Zoom, Microsoft Teams and Google Meet may seem convenient, but they lack the professional features retail investors expect from listed companies. These platforms offer limited branding, participant caps and lack the interactive features - like moderated Q&A and engagement analytics- that help you understand retail investor concerns. 

EngageStream is specifically designed for listed companies engaging diverse shareholder bases. It embeds directly into your IR website, maintains your corporate branding and offers unlimited capacity. Interactive features like moderated Q&A and real-time translations address retail investors' desire for dialogue rather than top-down communication. With peer-to-peer streaming technology and dedicated support, your events maintain the professional image retail investors expect from public companies.

FAQ

Why is retail investor communication different from institutional investor communication?

Retail investors often require clearer, jargon-free explanations and more engaging content formats, as they may lack the technical background and direct access to company representatives that institutional investors have.

What tools can help streamline communication?

Tools like investor CRM systems, IR websites with multimedia integration, email automation platforms and interactive webcasting solutions can centralise your messaging and ensure consistent, compliant outreach to retail audiences.

How often should we communicate?

Regular, quarterly updates aligned with financial reporting are essential, but maintaining engagement with additional touchpoints between reports, such as newsletters, videos or social media posts, helps build trust and ongoing interest.

Conclusion

Retail investor communication requires a clearer and simpler approach to recognise the experience level and concerns of your individual shareholders. They appreciate the opportunity to converse with the organisation and you must recognise that they need open, transparent engagement from your team. One way to achieve this is to webcast investor events using interactive features like polls and live chat to facilitate two-way conversations that add value to their experience and allow you to disseminate important information and control the narrative.

EngageStream is a secure, robust webcasting solution that offers interactive tools to help you reach the largest number of investors as possible, whilst maintaining the engaging experience that retail investors desire. Request a demo today.

References and further reading

• How to host captivating investor days
• Webcasting your Capital Markets Day
• Engaging shareholders virtually
• How to gauge investor sentiment
• How to increase transparency in shareholder communications