With more than 45 million self-directed investors, online brokers and other wealth tech providers are struggling with user acquisition. The cost of acquiring a new user can vary from $250 – $1500 which is why companies allocate considerable resources to retain existing users.
With the rise of low-cost brokers, social brokers, robo-advisors and other innovative alternatives, the best way to retain individual investors is by giving them a better user experience and/or creating communities. User experience can come in the form of better research tools, easier navigation and high quality educational tools and content.
In light of this, TipRanks has compiled a list of the 3 most popular research tools based on a poll sent to 100,000 active investors.
1. Expert Opinions
An eMarketer research published in 2014 shows that 72% of millennial investors prefer to make their own investment decisions with about half saying they will consult with experts. Experts can be analysts, high profile advisors, or “Gurus” such as prominent hedge fund managers. With growing reliance on external sources of experts for the last 5 years, more and more brokers offer research tools around financial experts to help investors gain confidence and make better-informed decisions.
Over the last 3 years, most of the leading online brokers have offered some sort of “Expert Center”. TipRanks leads this category with a fast-growing “Expert Center” which is provided to 50 online brokers worldwide. Fidelity also partnered with Thomson Reuters to provide analyst recommendations, and most of the online brokers found other alternatives.
E*TRADE Stock Analyst Recommendations by TipRanks
Interactive Brokers – Stock Analyst Recommendations by TipRanks
2. Crowd Wisdom
New social trading platforms are an increasingly popular research method for retail investors. These platforms enable investors to follow the trades of other investors based on their performance. eToro is the undisputed category leader in this space followed by Ayondo, Tradeo and a long list of other brokers. While the concept of copying other people’s trades was not allowed in the US, in other countries this method has really taken off. Over the last year we saw the concept of crowd wisdom popping up with brokers such as Robinhood providing their users Crowd-Wisdom insights based on the activity of their investors.
TipRanks Individual Investor Sentiment
Robinhood Desktop Platform
The idea is simple: investors gain valuable insights and confidence by looking at what other investors or similar investors are buying and selling. The concept is derived from e-commerce with Amazon’s famous “People who bought this also bought…”. Via API, TipRanks provides many crowd wisdom insights on portfolio allocation and the stocks best-performing investors are buying and selling.
3. News Analysis
Studies show that 67% of investors use the news for research, more than any other available resource. Today there are more than 20,000 stock related articles published every day on 100 of the biggest financial news websites. However, an active investor will read 2 or less articles a day that are related to their holdings, meaning that an individual investor sees only a fraction of the relevant information. Large buy side institutions such as hedge funds have always leveraged expensive news analysis tools to save time and consolidate real-time information. Indeed, well-known companies like DataMinr, RavenPack and others dominate social media and news analysis space but for prices that only financial institutions can afford. However over the last few years, we can see a growing trend of companies offering insights from the web, including TD Ameritrade offering Likefolio’s social media analysis. Some other vendors providing news analysis include Accern, Alexandria Research, and of course TipRanks.
TipRanks News Sentiment Analysis Tool
TipRanks News Analysis Tool – this tool scans financial articles across the web in real-time to extract relevant stock pieces. This news is subsequently divided into bullish and bearish categories, while the density of the articles per week reveals how the media buzz levels transform over time.
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