The kids are fine: the old guard of finance sees the generational change

October 8 (Reuters) – When Wall Street veterans gathered this week for one of their first face-to-face conferences since the start of the pandemic, the focus on emerging issues from “memes stocks,” to crypto -currencies and free trade applications, marked a new era for the world of finance.

More than 460 financial executives, regulators and politicians gathered in Washington, and 800 more connected virtually, for the Security Traders Association (STA) annual conference, an event best known for rehashing dry questions decades old. from trading fees and market data to advances. in algorithmic trading.

But this year’s rally, which ended on Friday, follows a few amazing months in which millions of young retail traders meeting in online forums and trading through low-cost mobile apps have often stacked up. in “memes stocks” – most notably video retailer GameStop (GME.N) in January. Read more

The volatility of this episode was a common theme, and for many attendees, problems struck close to home: in fireside discussions and panels, several said their children were drawn to the market after Retail brokers like Charles Schwab Corp (SCHW.N) and Fidelity followed Robinhood Markets (HOOD.O) and ditched commissions.

Robinhood said at the end of the last quarter that it had 21.3 million active users, with an average age of 31, and half of them were new investors. The company is also trying to recruit new users on college campuses, offering $ 15 to start investing and the chance to earn $ 20,000 for tuition.

“I’m delighted my kids are even talking about trying to invest, save and look to the future,” said Republican lawmaker Bill Huizenga, who has five children aged 15 to 24.

“I think we should encourage this,” he added.

Eric Pollackov, global head of ETF capital markets at Invesco, marveled that his son, a sophomore university student, used a mobile app to purchase an exchange-traded fund created by his company that tracks corporate bonds. investment grade long-term US companies.

“What I like to watch in this industry… is the rate of adoption by all types of investors,” he said.

But while many participants applauded the emergence of a new class of investors, others issued a note of caution. After what happened in the GameStop affair, the Securities and Exchange Commission (SEC) launched a consultation on the game-like behavioral prompts that some brokers are using to conduct trades, as young investors fear they may be. manipulated into risky transactions. Read more

Allison Lee, a Democratic SEC commissioner, said her five children, all in their 20s and 30s, also use trading apps.

Talking to them about market risks tends to “bore them to death,” she said, but she wants to make sure brokers fully disclose potential conflicts of interest and how they generate their income, so let everyone understand how they work.

Cryptocurrencies are also attracting young investors, including the children of former Commodity Futures Trading Commission chairman Christopher Giancarlo, known among crypto evangelists as #CryptoDad for his support of the new industry.

He recalled how a discussion on a family ski trip with young people in their twenties who had never shown interest in the markets before opened his eyes to “a real generation gap”.

“They intuitively get digital money, they intuitively get tokenization, and they intuitively get bitcoin and crypto,” he said.

The SEC chief warned of widespread cryptocurrency fraud. Read more

STA chief Jim Toes said protections are needed for this new generation of investors, noting that his 23-year-old is also entering the market for the first time.

“It also kind of renews that sense of responsibility we all have to be the stewards of the market,” he said, “and to make sure we leave something better to the next generation. “

Reporting by John McCrank; edited by Michelle Price and Sonya Hepinstall

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