How millennials blaze new trail in stockbroking

As of Oct 31 this year, approximately 79% of the broker’s clients were below 40 years old

by MARK RAO/ pic by BLOOMBERG

DIGITALISATION, which has opened the gate to the world of equities, has created a new breed of investors that brokers are competing to capture — the millennial.

Rakuten Trade Sdn Bhd — Malaysia’s first fully online equity broker — said there is a growing interest among millennials to invest in the stock market, previously has been the domain of the rich and wealthy.

“We believe this is due to how the industry is embracing digitalisation to cater to more tech-savvy consumers. These investors are searching for easy, uncomplicated ways to earn more money,” its MD Kaoru Arai told The Malaysian Reserve.

The rapid rise and now ubiquitous presence of digital offerings have challenged the traditional stockbroking business as more volume and the revenue associated with it move towards this new space.

Interest in trading shares is prompting brokers and remisiers to shift from merely executing orders to providing a holistic value chain for today’s investor.

“Today — speed, convenience and access (in the stock market) have become crucial motivators, especially for millennials. This is a game changer, if the industry is willing to embrace it,” Arai said.

From banking to shopping to buying groceries, the digital world has become a necessary staple for millennials, he said.

He said the perception that trading shares is exclusively for adults, and a high-risk and high-capital venture is now giving way to greater financial literacy among millennials who view investing as a mean to gain financial security.

“With information more readily accessible through social networks and the ability to search for almost anything online, financial literacy has grown and, with this, trading in shares has become more appealing,” Arai said.

He said many millennials are either just starting out in their careers or are on an upwardly mobile trend.

“Most may not have reached a career plateau, making this an ideal time to start looking at ways to make their income, work harder for them and can afford to be a bit more adventurous.

“Investing should be for the long term and should be a way to gain more financial security,” he said.

So, what exactly do millennials — typically defined as those born between 1980 and 2000 or reached adulthood in the early 21st century — look out for when investing?

According to Arai, millennials are generally more digitally savvy and inclined to seek convenience when conducting their share trading activities.

“They prefer to be in the driver’s seat of how and when they trade. Making trading affordable is another pull factor for most, especially for the millennials,” he said.

In other words, while boasting low brokerage fees are likely to attract new investors, particularly those within the millennial category, retaining them requires a holistic trading, platform that can be seamlessly navigated.

“Accessibility does not just mean ease of trading, but the complete 360° experience from account opening, execution, settlement and trade to research and trading ideas, as well as rewards and financial education,” Arai said.

Brokerage firms, which have been offering online trading platforms, are enhancing their platforms to capture these new breed of investors. For Rakuten Trade, millennials are a key market.

Since first opening its doors back in May, 2017, the broker registered close to 45,000 account activations, while generating close to RM7 billion in trading value executed on Bursa Malaysia — Malaysia’s local bourse.

As of Oct 31 this year, approximately 79% of the broker’s clients were below 40 years old, while more than 40% did not have any prior trading experience, Arai said.

“We deliver easy-to-use and efficient services that have narrowed the industry gap and as a result, we have activated a completely new segment of traders.”