New Technology Is Transforming Retail Investing—For Better or Worse
The rapid evolution of investing tools has made it easier than ever for retail investors to navigate markets like seasoned professionals. However, this unprecedented access also introduces significant risks that demand careful consideration.
Over the years, technology has continuously reshaped how investors engage with markets. In 2024, this trend accelerated, making it a pivotal year for retail investors. Brokerages, fintech firms, and financial institutions launched a wave of innovative products, altering the way individuals manage their money—and how companies profit from it.
Crypto ETFs and Regulatory Shifts
One of the most significant developments of 2024 was the SEC’s approval of spot Bitcoin exchange-traded funds (ETFs). This allowed retail investors to gain exposure to cryptocurrencies through traditional brokerage accounts, bypassing the need for digital wallets. The approval sparked a surge in crypto ETFs, with expectations for further growth in 2025, especially as regulatory leadership changes could foster a more crypto-friendly environment.
While this regulatory shift opens new opportunities, it also underscores the need for vigilance. According to Richard Hong, a former SEC enforcement lawyer, the evolving regulatory landscape might ease pressures on financial companies but could also leave investors more vulnerable to potential risks.
New Fixed-Income Opportunities
Retail investors also benefited from innovations in fixed-income products. Brokerages like Public and Webull introduced fractional bond investing, enabling smaller investors to access high-yield bonds without steep minimums. Companies like Wealthfront expanded these offerings with automated bond-ladder strategies, using technology to simplify traditionally complex investments.
As Dave Myszewski of Wealthfront explained, these tools not only democratize access to sophisticated strategies but also pave the way for future innovations by leveraging existing technological infrastructure.
Advanced Trading Platforms
Brokerages continued to enhance their platforms, providing retail investors with tools rivaling those used by professional traders a decade ago. Firms like Fidelity, Robinhood, and Interactive Brokers introduced advanced charting, technical analysis features, and scenario analysis tools.
For example, Robinhood’s launch of its browser-based platform, Legend, marked a significant shift. Designed for increasingly sophisticated users, it reflects the evolving needs of retail investors who demand greater control and insight into their portfolios.
Event Contracts: A Controversial New Asset Class
One of the most debated innovations of 2024 was the rise of event contracts, which let investors bet on future events, such as political elections. Platforms like Kalshi and Interactive Brokers’ ForecastEx popularized this niche asset class, making it more accessible to retail investors. However, critics argue that such products blur the line between investing and gambling, raising concerns about potential addiction and financial harm.
Ann H., a New York-based retail investor, shared her mixed experience with event contracts, acknowledging their speculative nature and likening them more to gambling than investing. While she found the experience engaging, she ultimately concluded that traditional investing aligns better with her financial goals.
The Retail Investor’s Dilemma
As technology continues to lower barriers to entry, retail investors face a dual challenge: leveraging new tools to build wealth while avoiding pitfalls. Robinhood’s Steph Guild emphasized the importance of education, strategy, and risk management.
“Decide what your investment goals are and design your strategy around them,” Guild advised. “These tools can expand your options, but they require knowledge and discipline to use effectively.”
Looking Ahead
With 2025 on the horizon, the pace of innovation shows no signs of slowing. As new products and tools emerge, retail investors must remain proactive, balancing the opportunities of advanced technology with the risks inherent in uncharted financial territory. Education, research, and self-awareness will be critical as individuals navigate this rapidly changing landscape.
