Lay Out The Welcome Mat

Third-party start-ups have made investing easier than ever before. But when it comes to the trust and education needed to coax small-scale investors back into the market, credit unions still have the edge.


Successfully attracting and accommodating the next generation of investors may be more critical than you think. While the market’s recent performance has erased or mitigated much of the damage done during the recession, “small investors have not only stayed away the past four years, they have sold hundreds of billions of dollars of stocks,” writes Bernard Condon of the Associated Press.

Now, an abundance of new self-directed platforms operating independently from financial institutions are seeking to coax back those who fled the market — as well as any young adults spooked by their parents’ bad experiences. As credit unions, it’s critical to ensure that your members not only have access to tools that are as good or better than those of your competitors, but also the educational resources to ensure their investment experience — whether a first foray or the return after a prior exodus — is a positive one. 

Inexperienced investors are often tempted to simply follow the leader, and new social platforms are making this practice easier than ever before. For example, one company lets users compare performance data against their peers, buy stocks, and even manually or automatically piggyback the moves of the site’s most successful investors, who earn money based on the number of follower trades that mimic their own.

For some consumers, putting investment activity on autopilot seems tempting. But aside from concerns about the trustworthiness of a stranger on social media or how this piggybacking may impact stock prices, credit unions will want to go the extra mile to educate members on the logic and principles behind successful investing, rather than simply dictating the next move for them.

What credit unions do need to embrace from many of these third-party platforms is the ability for investors to share their experience with others or access outside data sources to broaden their horizons. For the best of both worlds, consider creating your own community of experts online or in person.

Advanced investors will typically spend around one hour per week, per stock gathering info, advised Raj Patil, CEO of New York-based aSpark, while presenting at last year’s Finovate New York conference. But beginners typically lack both the time and the expertise to track down this information, so it especially practical for them to have data aggregated in one accessible place.

If credit unions can consolidate their own internal expertise and functionality with these external investment resources in a single branded or co-branded platform, they can essentially become a one stop shop for both current and potential member investors.