A recent report conducted by DriveWealth has revealed a 241% increase in account openings on the company’s embedded finance platform since January 2020, with young investors (Millennials and Gen Z) accounting for over 80% of these new openings. The report includes proprietary data from more than 15 million global investors who trade fractional shares of US equities through DriveWealth’s network of more than 100 global partners.
Who is DriveWealth?
Since its formation in 2012, DriveWealth has been a pioneer of fractional equities trading and embedded investing, allowing partners to offer branded investing experiences to drive customer acquisition, retention and revenue growth. The American-based company has ambitions to deliver the most modern brokerage infrastructure to its 100+ partners around the world and power the future of digital investing.
Summary of the research findings
DriveWealth’s report, released on 27 January, highlights the global trends in retail investing throughout 2021. One of the most notable findings from the report concerns the startling 241% increase in account openings on the company’s embedded finance platform since the turn of the decade, with a 12% increase in 4Q21 alone.
Of these new openings, more than 80% were executed by Millennials and Gen Z, emphasising the ever-increasing presence of young investors in financial markets today. This is a trend accelerated by the Covid-19 pandemic, emergence of cryptocurrencies and developments in digital investing. The number of trades placed on DriveWealth’s platform by Millennials increased by 78% year-on-year and accounts opened by Gen Z rose 20% in 4Q21 compared with 3Q21 alone.
Although 2021 saw a significant surge in account openings, DriveWealth’s report found that average trade sizes have trended lower since the turn of the decade. DriveWealth believes this pattern is largely due to the rise of digital investing, whereby investors enjoy greater flexibility and are able to facilitate trades more easily than ever before. This idea is reinforced by the fact that Gen Z investors have the lowest average trade size ($112) of any other age demographic, whilst Millennials executed the highest number of average trades per quarter (8.3) in 2021.
DriveWealth’s report also revealed the top trends in stock picking across many regions. In the US, the top five traded symbols were VOO, TSLA, VTEB, VXF, and SUB, while the top traded ETF was Vanguard S&P 500 Index fund. Tesla was amongst the top five traded symbols for the EMEA region, Latin America and Asia Pacific, whilst Amazon and Apple were present in two of these three geographical regions.
What does the future hold for investors and financial markets?
DriveWealth anticipates that users’ investing experience and investor sophistication will further evolve in 2022. With this, financial markets are likely to see continued growth in demand for a wide variety of next-gen tools that enable investors to start early, engage often, automate investing preferences, and provide interchangeability across assets.
Digital investing has grown to represent a significant part of financial markets today, but it is plausible to assume that developments in this area will rise exponentially over the next few years. As Harry Temkin, Chief Information Officer at DriveWealth, puts it, “With these new embedded finance tools for financial wellness in the pockets of emerging investors around the globe, we believe we’ll see significant momentum carry into 2022” (and beyond).”
