Large waves of new investors are changing the dimension of the US capital market. It is estimated around 33% of equity and derivate trades are initiated by retail investors. In 2020 15% of retail investors were first-timers. This emerging sect of clients has varied needs, risk appetite, and financial goals, which need to be supported by professional financial advisor San Antonio. The key is to identify and deliver proper investment tools that align with their behavior and financial goal. Several strategies formulated by financial advisors are shaped keeping in view the empowered retail investors, their expectations, and the ever-growing space for proper financial guidance.

55% of wealth management patrons

A new holistic approach is called for the day, as 55% of wealth management patrons in the US and Canada assume the advice they get is too stereotypical. In the same study, it is also stated 34% of those consumers would increase their portfolio size if they received customized service and advice. Two important factors make or break financial advice delivered to retail investors; first, it should meet the crux of the investment need. The second is to deliver a financial instrument that aligns with the financial goal and objective of the investor. To supply the investor`s need, it could be an endowment, retirement plan, banking, insurance, ESG (environmental, social, governance), or SRI (socially responsible investing) plan. It is noteworthy to state ESG is the preferred investment instrument for 84% of retail investors.

Right digital experience

Delivering the right digital experience to patrons has been on the agenda of many wealth management firms. With the emergence of tech-savvy retail investors, the demand for more intuitive and engaging digital experiences is increasing in leaps and bounds. More wealth management entities are incorporating algorithms akin to global tech companies, as 32% of investors like digital recommendations regarding the capital market irrespective of their portfolio strength. With autonomous trading platforms and other instruments, more violations are reported due to the absence of proper guidelines and awareness. The financial advisors empower the retail investors by stating about the exposure and leverage through one-to-one meetings. Once you know the guidelines and how to avoid too much leverage, those platforms promise to deliver amazing results.

Diverse asset classes

The emergence of retail investors opens many horizons for wealth management companies, as well as for investors. The endowments could constitute 40-50% of your portfolio with diverse asset classes. A well-diversified portfolio reduces the risk component inherently associated with the capital market. The financial advisor creates a well-balanced portfolio having hedge funds, private equity, real estate, and infrastructure bonds. Diversified funds reduce the risk factor exposure to each class of assets. If 90% of the risk factor comes from the growth and volatility of equity, the portfolio is considered to be less diversified. The ultimate objective is to beat the market; it becomes more challenging if your portfolio face concentrated exposure.

Non-biased fund

Making a portfolio construction financial advisor considers many factors while asset allocation. A biased portfolio often underperforms a well-performing portfolio and is more of a manager than fund allocation; index and factor-based portfolios tend to deliver a better return, liquidity, and transparency.