Retail Investors Matter. Here’s What IROs Can Do About It
Retail investors are no longer background noise. According to Gallup (2025), 62% of U.S. adults now own stock, the highest share in two decades. At mid-cap firms, small shifts in retail turnout are determining governance outcomes. This trend is global and structural, not cyclical.
Mark Hayes, Partner and Head of Capital Markets at Breakwater Strategy, recently published a framework in Informed Magazine (the IR Society’s flagship magazine) for managing the rise of retail investors. Below are his key recommendations:
Retail Is No Longer Background Noise
Mark opens the article with this:
“For much of the modern era in finance, retail shareholders were an afterthought. They were perceived as small, dispersed, excitable, and most importantly, ignorable. That model is gone.”
Retail participation is rising globally. Gallup reports that 62% of U.S. adults now own stock, the highest in two decades. France recorded 800,000 individual traders in a single quarter. In China, individuals drive four-fifths of equity turnover, and in India, households now own roughly a quarter of listed equities.
His conclusion: “Retail participation is no longer cyclical froth, it is a durable, global feature of modern markets.”
Why it matters for IROs:
Retail investors now influence everything from trading activity to governance outcomes. They can steady the stock or amplify volatility, depending on the moment. IR teams need a plan for managing both sides of this dynamic.
Regulation Is Expanding Retail Power
Recent rule changes give retail investors more direct influence.
- The SEC’s universal proxy rules (2022) allow split votes across slates, lowering barriers to retail participation
- T+1 settlement (2024) shortened the window for record-date risks, giving retail more certainty in proxy participation
- BlackRock and Vanguard are running pass-through voting pilots, returning proxy power to millions of households
He shares: “If scaled, this could upend proxy solicitation strategies.” He also notes that “the compression of proxy timelines under T+1 leaves little margin for error.”
Why it matters for IROs:
With friction dropping across universal proxy, T+1, and pass-through voting, proxy season will include a larger and more diverse retail voter base. IR teams will need clearer, more consistent communication systems to reach them.
Retail Ownership Brings Both Opportunities and Risks
“Retail can be a reservoir of loyalty or a source of destabilising frenzy.”
On the Opportunity Side: firms with strong retail bases enjoy “more stable demand in secondary offerings and dividend reinvestment plans,” and broad household participation “enhances reputational legitimacy, particularly in regulated sectors like energy or utilities.”
On the risk side: “meme-stock surges illustrate how retail attention can inflate valuations away from fundamentals, leaving firms exposed to corrections.” He also notes that “traditionally retail-heavy firms often attract thinner analyst coverage too, raising debt costs due to perceived information asymmetry.”
Why it matters for IROs:
Retail ownership brings stability in some situations and sharp swings in others. Understanding both sides helps IR teams prepare for valuation swings, analyst coverage gaps, and shifts in capital costs.
Not All Retail Investors Are the Same
Mark shares the Retail Paradox Quadrant, which segments retail investors into four archetypes:
Anchors: Long-horizon investors holding via ETFs, DRIPs, or retirement accounts.
Amplifiers: Momentum-driven traders, often organized via social platforms.
Advocates: Governance-minded shareholders who file proposals and push ESG agendas.
Absentees: Passive holders who rarely vote or engage.
Why it matters for IROs:
Retail investors are not one group. They behave differently, absorb information differently, and engage at different levels. Knowing which group you’re dealing with helps shape the right communication approach.
IROs, What You Need To Do Next
The central lesson is paradoxical: retail is both ballast and accelerant, both stabiliser and disruptor. For IROs, the task is not to resolve this duality but to manage it – systematically, strategically, and at scale. Here’s how:
Monitor: Build dashboards that integrate broker and exchange data to track retail flows in real time, and map investor cohorts into the Retail Paradox Quadrant as sentiment shifts.
Engage: Tailor communications to each archetype. Anchors value consistency. Amplifiers require myth-busting. Advocates expect genuine dialogue. Absentees respond to nudges. Disclosures should also reach investors across apps, brokers, and social platforms without fragmenting the message.
Govern: Prepare for higher retail turnout and a reduced reliance on proxy advisors. Design campaigns that combine rational appeals with emotional resonance, since retail decisions are often narrative-driven.
Measure: Define KPIs such as proxy-vote turnout, the percentage of disclosures accessed via mobile, and concentration of float by top brokers. Benchmark against peers to understand where retail engagement strengthens or weakens the capital structure.
Why it matters for IROs: These imperatives turn the retail paradox into a manageable system, helping companies convert retail from a potential risk into a source of legitimacy, liquidity, and loyalty.
In Case You Want to Dive Deeper
If you want to read the full article, it’s in the Autumn 2025 issue of Informed Magazine, and thanks to Mark and Robert for the original piece.
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