The value in creating accessible, transparent channels of communication, in a financial world increasingly clouded with noise and misinformation, has never been so imperative. The financial markets have progressively become a home for a new generation of retail investors, buoyed by the accessibility of modern trading applications and a vocal online community of financial influencers and advice forums. In fact, since the beginning of 2020, over a quarter of new investors are women. This level of engagement should be welcomed, though ensuring that communications channels are well-equipped to manage a busy pipeline of votes, and viewpoints, must be a priority for listed companies. Only by creating a transparent, accessible ecosystem of shareholder communications, with a diverse set of voices interwoven at the creation and implementation stages, can we ensure that every viewpoint is heard.
New investor demographics require new solutions
As Head of Client Onboarding Proxymity, I have seen the shifts in the ways issuers and investors engage with one another, and the demands that the new economic reality places on all parties. The new normal is a society characterised by the desire for instant communication, particularly where investments and shares are involved. With investors able to receive instant notifications alerting them to news around their respective investments, it is understandable that they have come to expect shareholder communications which are equally transparent and immediate. This takes on greater importance against a backdrop of daily market changes and geopolitical and economic turbulence which can cause shifts in voter priorities and attitudes.
Rapidly changing investor demographics also hasten the need for a transformation in shareholder communications. According to Fidelity, around 60% of women now invest in the stock market, rising to 71% among Generation Z. This is undoubtedly a positive change that will both contribute to a bustling, liquid financial market and help bridge the financial gap that persists between men and women. However, the same study notes that women are less confident in their own investing abilities compared to men.. By ensuring that communications between issuers and investors are as rapid and transparent as possible, we can create a better-informed audience of both male and female shareholders, for the long-term.
Yet, there remain legacy processes that inhibit the levels of swift communication that the markets now expect. Proxy voting is an essential component of corporate governance, yet inefficient proxy voting processes mean that investors are often left with minimal time to vote on key issues and influence important decisions. The current proxy voting system can hinder the ability of investors to exercise their voting rights effectively, particularly given the number of intermediaries that often line the path between investor and issuer. Further, with women investors found to be less impulsive than men, the current system does not provide able time to ensure an informed decision is made.
Instead, a holistic, transparent view of the market is essential. Information must be communicated instantly to all levels of the financial ecosystem at every stage of the life cycle of an AGM, promoting truly transparent communications that meet the needs of all investors. This streamlining of the voting process in turn reduces the risk of bias or error, helping to promote good corporate governance, enhance shareholder value, and ensure greater engagement between companies and shareholders.
A shift to greater diversity
The change in investor demographics has also been mirrored in the financial institutions which support them. The financial sector has previously held a poor reputation for diversity, with a lack of willingness to promote women to senior positions. Indeed, many women will likely be able to recount more than one occasion where they have been assumed to be less senior or experienced than junior male colleagues. Thankfully, there has been a steady shift away from this mentality and the new demographics engaging with the financial markets are also reflected in the welcome increase in diversity seen across finance. Over the past decade, more women have been added to financial C-suites than men, according to Deloitte.
It is important that women in finance continue to build on the opportunities increasingly available to them, to in turn promote further opportunities for the next generation of talent. Pleasingly, the role of the role model has shifted. Holistic improvements by companies in the promotion of progressive attitudes means that women no longer need a direct supervisor or manager of the same gender to succeed.
At Proxymity, this meritocratic approach has been embedded within the company since our inception, thanks both to our founders and the innate ability of startups to more easily engage with the principles of diversity. Companies must now ensure they maintain this ongoing dialogue, ahead of ineffective, one-off commitments, to ensure both the financial sector and the financial markets become truly accessible to all.