Investor Behaviour Shifts as FINRA Reveals New Trends — What It Means for Markets and FinTech

Recent research and surveys released by the Financial Industry Regulatory Authority (FINRA) have revealed meaningful shifts in investor behaviour across the United States. These findings, drawn from the FINRA Foundation’s National Financial Capability Study (NFCS) and other data points, show that the landscape of retail investing is evolving — not just in terms of what people invest in, but how they approach risk, market participation, and financial decision-making.

Understanding these behavioural shifts is crucial for financial institutions, fintech platforms, advisors, regulators, and individual investors alike. As finance becomes increasingly digital and global, patterns revealed by FINRA offer a snapshot of changing participation, risk tolerance, and engagement modalities in today’s markets.

Declining New Investor Participation

One of the most striking findings from FINRA’s latest studies is the sharp decline in the pace of new investors entering the financial markets. According to the 2024 NFCS data, only 8% of current investors reported starting to invest within the last two years, compared with 21% in the two years prior to 2021.

This decline suggests that fewer people — particularly younger adults — are taking the leap into market participation at a rate seen after the pandemic surge. It also correlates with broader trends showing a drop in crypto purchase intent and speculative risk appetite among U.S. investors. While crypto ownership has remained relatively flat, the willingness to buy more — especially among retail investors — has cooled significantly.

The drop in new participation does not necessarily mean disinterest in markets, but rather greater caution. Many newer or younger individuals appear to be waiting for clearer financial footing, greater education, or more stable market conditions before committing capital.

Changing Risk Appetite and Investment Choices

The data reflects a noticeable shift in investor risk tolerance. The 2024 NFCS indicates a trend toward more cautious behaviour compared with 2021, with fewer investors considering higher-risk assets such as cryptocurrencies or speculative products.

This trend is visible in several dimensions:

• Reduced interest in buying additional crypto assets, even though ownership remains steady.
• Lower reported risk tolerance among some segments, particularly younger investors who were previously more active in digital asset markets.
• A growing emphasis on risk assessment and caution before entering new positions.

The implication is clear: investors are becoming more selective about where they allocate capital, prioritising stability and knowledge over speculative gains. Financial literacy and risk awareness have become more central to decision-making, often influenced by market volatility and broader economic uncertainty.

Evolving Engagement with Financial Products

Investor behaviour is also shifting in terms of the types of financial products being embraced. Awareness and usage of diversified products like exchange-traded funds (ETFs), traditional brokerage services, and regulated financial products have climbed in recent years, even as interest in newer and riskier instruments cools.

This trend points to a bifurcated investor base:

• A group that continues to seek exposure to diversified and regulated products like index funds, ETFs, and retirement vehicles.
• A more cautious segment that has moved away from high-risk, speculative trading without abandoning participation entirely.

These patterns suggest a return to more traditional financial behaviours following the pandemic-era boom in speculative trading and crypto-focused engagement.

The Influence of Education and Information Sources

FINRA’s research also highlights how access to financial education — or the lack thereof — shapes behaviour. Younger and less experienced investors, in particular, face gaps in investing knowledge and risk assessment, which may contribute to their reluctance to join markets.

At the same time, the sources of investment information are changing. Independent research from related studies shows a growing reliance among younger investors on information from social media and influencers — platforms that are not regulated and frequently lack rigorous financial context.

This dynamic has implications for both risk and regulatory oversight. While digital platforms increase access, they also raise the potential for misinformation, hype-driven decisions, and exposure to misleading investment narratives.

Stronger Investor Protection and Education Efforts

In response to these behavioural shifts, FINRA and its Investor Education Foundation continue to stress the importance of investor protection, literacy, and guidance.

The NFCS and related initiatives aim to:

• Raise awareness of financial concepts
• Improve understanding of risk and portfolio diversification
• Provide tools for better long-term decision-making

This aligns with broader regulatory trends emphasizing investor protection alongside market innovation.

What This Means for FinTech and Financial Institutions

For fintech companies and financial institutions, these behavioural trends carry several strategic implications:

• Product design must balance accessibility with education: Platforms should integrate easier-to-understand guidance and risk tools alongside execution functionality.
• Digital engagement alone is not enough: Engagement must be supported by trust, clarity, and relevant education to retain and grow user bases.
• Regulatory alignment and responsible innovation are critical: As investor behaviour evolves, so must compliance frameworks and risk management features.

FinTech firms that can blend intuitive interfaces with strong educational resources may capture a larger share of user engagement without compromising investor confidence.

Conclusion

FINRA’s recent insights into investor behaviour reveal a market that is more cautious, more selective, and increasingly driven by risk awareness and financial understanding. As fewer new investors enter markets and interest in speculative assets like cryptocurrencies cools, the financial ecosystem is adapting.

For investors, regulators, fintech platforms, and advisors, these behavioural shifts underline a broader transition in how individuals approach markets — one that prioritises knowledge, resilience, and long-term strategy over rapid participation.

The ongoing challenge will be ensuring that access to financial markets remains inclusive, educational resources keep pace with evolving needs, and fintech innovation continues to support informed decision-making.

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