BCG-WEF Project: 2024 Global Retail Investor Outlook

A Fundamental Shift in the Way Individuals Participate in Capital Markets

For decades, retail participation in capital markets occurred largely through the intermediation of institutional players, including state pensions and employer-provided investing programs. Today, however, individuals are increasingly taking ownership of their financial decisions and futures. Investing can empower them to achieve their financial goals by actively pursuing tangible returns in the market, rather than relying on traditional savings alone.

These individuals constitute a sizable and growing contingent. More than 100 million people use stock trading apps annually, and usage is growing at a 20% CAGR. Retail participation in capital markets has picked up after falling from the peak reached during the pandemic, and this renewed enthusiasm is here to stay.

This fundamental shift no longer reflects the outcomes of a temporary trend linked to viral social phenomena (such as “meme-stock” trading) but rather is the consequence of a sustained behavioral evolution driven by demographic, economic, and technological forces.

Four Key Trends

In 2022, the World Economic Forum conducted the first iteration of its survey to examine individuals’ behaviors, preferences, and knowledge of capital markets across 9 geographies. It found both significant interest and material barriers. The 2024 survey, a BCG-WEF-Robinhood joint initiative, expanded the analysis to 13 global markets, building upon the earlier findings, and identified four key structural trends that are driving individuals’ retail investment activity today.

A New Wave of Retail Investors. With greater access to financial information and brokerage platforms than ever before, a broader set of investors, including younger individuals, are engaging with capital markets. Indeed, investors are becoming increasingly diverse across age, geography, gender, and income. They are demonstrating earlier and heightened interest in capital markets, are eager to explore a broader range of asset classes, and strongly value tech-enabled wealth management journeys. In some parts of the world, younger generations also stand to inherit and deploy substantial wealth through capital market participation.

This new wave of investors prompts a renewed evaluation of current financial services offerings.

Market Cycles and Inflation. Between 2021 and 2024, rising inflation drove up the cost of living, leaving consumers with less disposable income and smaller investment budgets. Consequently, many focused on short-term financial goals.

At the same time, the erosion of cash’s purchasing power (owing to inflation) pushed many individuals to pursue higher returns on their savings through investing, often benefiting from widespread stock market rallies. Despite their role as a potential inflation hedge, capital markets have an unpredictability that keeps raising concerns among retail investors, discouraging many from participating at all.

Overall, individuals’ worries about their short-term financial goals have grown compared with 2022. A longer-term market participation horizon and consistent diversification away from cash holdings can help retail investors navigate the cyclicality of the financial system and eventual devaluation of liquidity in an inflationary environment.

Product and Platform Innovation. Innovative trading platforms and greater access to new and sophisticated asset classes are reshaping retail investor activity, empowering individuals to select from a broader spectrum of market engagement strategies—including those that were formerly exclusive to wealthier groups.

To fully benefit from these innovation trends, financial institutions must rethink their retail offerings and meet the evolving needs of new investors through a revamped approach to risk management, service model design, and educational support.

An AI and Tech Boom. By leveraging AI technologies across back-office optimization, operational automation, and personalization, financial system stakeholders can increase the efficiency and affordability of their offerings. However, it is crucial for such AI solutions to be developed and delivered responsibly. Responsible AI means that addressing data privacy and potential algorithm bias becomes an absolute priority that requires systematic consideration.

In sum, AI has the potential to revolutionize individual participation in capital markets—especially among increasingly tech-savvy constituents.