The Sophistication of Retail

Terry Flanagan

A range of alternative products is allowing high net worth and retail investors the chance to break into the previously guarded domain of institutional-type investing.

Mom and Pop investors continue to grow their revenue streams as family offices and other high net worth investors blur the lines between institutional and retail.

“Retail investors are accessing more institutional-type products, such as options and foreign exchange,” said Joe Stensland, senior vice-president and managing director of wealth management solutions at solutions provider Scivantage. “There’s also more ‘money management’…more separate managed accounts available for retailers. Such products originally required a minimum investment of at least $250,000, but now may require between just $50,000 to $100,000.”

New technology and systems are now in place to support this upgrade in investing tastes. One such offering is from Scivantage, an independent enterprise brokerage software tool that relies on cloud technology to be completely web-based. Many of Scivantage’s analytical capabilities offer retail investors today what would have been ideal for “portfolio managers five years ago, such as self-automation trade execution, and compliance “throughout the system”, said Stensland.

Although Stensland acknowledges the advent of the evolution in investing, he told Markets Media that the change was slow to come to fruition.

“I would argue that the natural evolution of retail investors has taken longer than it should, because the market keeps getting in the way,” he said, citing that in times of higher returns, investors are keen to pay higher costs (i.e. to advisors) for rewards, but scale back in volatile times where the fees don’t justify little or no returns.

Despite the emergence of a more self-directed retail investor, brokers still exist for their ability to consult on these newer asset classes and product-types. For any investor, retail, institutional or alternative, technology is always better in a consolidated platform.

“I’m not exactly sure what I’ll be looking for but I want a consolidated platform that does the clearing, trading, custodial word,” said a source. “That way I don’t need to buy a bunch of different systems. I want something that can do a bit on the portfolio construction side, but mostly on the trading side.”

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