The Blog

Unlocking Potential: How Companies can Adopt Inclusive Investor Engagement

Dec 4, 2023 | Corporates

The UK has an investor engagement problem. 

While researching our recent whitepaper, ‘The Path To Inclusive Investor Engagement‘, we uncovered a staggering statistic: there are over 23 million individual shareholders in the UK, representing 12% of all shares on the London Stock Exchange (even more when considering those invested through pensions and mutual funds). However, most FTSE companies continue to prioritise engagement with a select few institutional investors, sidelining individual investors.

This is a problem for companies as well as individuals, here’s why.

Access to investment. Retail investors have played a pivotal role in sustaining the US stock market over the past year, injecting a staggering $1.5 billion daily. By focussing too heavily on a narrow number of institutional investors, companies are at risk of missing out on this crucial source of funding.

Secondly, broader engagement can lead to higher turnout at company meetings, reduced share price volatility, and ultimately, elevated company valuations. We can see this clearly in countries like Australia, where market structures amplify the voices of retail investors.

Engaging with retail investors not only offers companies a broader investor base but also provides access to a diverse spectrum of thought. By capturing the thoughts, opinions, and questions of individual investors, companies can tap into an invaluable source of new information and perspectives.

The Engagement Appeal aims to foster engagement with all individual investors, but we’re placing specific emphasis on improving engagement between companies and ‘Gen Z’ investors. 

With 50% of all individual shareholders in the UK aged between 18 and 40, and 18% falling between 18 and 24, Gen Z emerges as a critical demographic. This generation, known for its heightened financial literacy and engagement, representing a cultural shift in approaches to finances, driven by a decade of rising stock markets, unique risk perception, and easy access to investment platforms.

By engaging with Gen Z and having them play a more active investor role, companies have an opportunity to build investor loyalty and tap into new schools of thought.

However, while active engagement sounds great in theory, we know there are a number of challenges inhibiting companies from putting this into practice. 

Investment from individuals comes through investment platforms, via pensions, mutual funds and more, making it very difficult to know who your investors are.

This is where we need to be creative and shift away from traditional engagement approaches. Companies need to work to establish new frameworks for engagement and commit to transparent, accessible reporting. We also need to be looking at how technology can enable companies to have better direct communication with individuals and how brokers and intermediaries can be brought on-side to help facilitate communication. 

At The Engagement Appeal, we’re coming up with practical ways to increase inclusive engagement, through conversation and debate.

Our recent Winter Women’s Company Secretary Circle with Link Group exemplifies this commitment, bringing together industry experts and thought leaders to delve into the role of technology and social influence in engaging ‘nextgen’ investors.

Join us in reshaping the landscape of investor engagement, unlocking its full potential for companies and individuals alike. Keep an eye on our upcoming events or sign up to get involved.

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