Today, one in 10 Russians has a brokerage account with Moscow Exchange. In just about three years, the number of individual investors has increased more than tenfold, reaching 15 million, and the exchange continues to register about half a million new accounts per month.
Trading by retail investors accounts for around 40 percent of stock-market volume. The reasons for the retail investing boom in Russia are not dissimilar to those driving the growth of retail investing in other markets: introduction of easy-to-use brokerage apps, the gamification of investing, and lower bank deposit rates pushing investors into higher-yielding instruments.
The explosive growth in interest in stock-market investing has challenged financial institutions to provide high-quality, systematic and accessible education to novice investors. Financial education and literacy programmes have the potential to help improve retail investors’ investing performance. Key benefits include more informed investment decisions, better financial and retirement planning, active participation and confidence in securities markets, and increased awareness of investor rights.
Complementary to its online educational school, Moscow Exchange has developed an online course we call The Investor's Journey, which has become part of our financial literacy programme.
Highlights from The Investor's Journey
The Investor's Journey course was created using the methodology from the International Organization of Securities Commissions (IOSCO), taking into account the experience of Moscow Exchange securities market experts, and with expert support from the Bank of Russia.
Our task was to present all the basic principles of effective investing – from understanding market risks to knowing investor’s rights – in a simple and accessible language.
We have structured The Investor's Journey as a sequential transition from simple to complex, and divided it into four modules that the user can complete at his or her own pace. The first module of the course focuses on the basics of financial literacy, asset diversification and budget planning. The second module covers products that are traded on the exchange. The third includes basic principles of making trades, analysis of financial statements of issuers, and the psychology of investing. The final module deals with the selection of a financial intermediary, broker or asset management company, protection of rights and solving common investing problems.
Each module involves training the retail investor in an interactive way using various methods such as investment calculators, tests and quizzes, surveys, as well as engaging video presentations.
What's “under the hood”?
The course covers seven content areas in which retail investors are encouraged to develop their competencies: Major principles and concepts of investing: basic principles of investing.
- Investment product characteristics: key characteristics such as product structure and fees, and the potential risks of different investment products.
- The process of buying/selling investment products: competencies applied in the process of choosing investment products, trading platforms, and providers of financial services.
- Investment portfolio management: competencies to monitor and manage investments.
- Rights and obligations of retail investors: rights and obligations as well as investor protection measures such as claiming and indemnification procedures.
- Investment-related behavioural biases: emotional or cognitive biases that can affect retail investors when making investment decisions.
- Investment fraud and scams: common features of investment fraud and ways to protect yourself against fraud and scams.
The core competencies for each content area are grouped into the following dimensions:
- Awareness and knowledge: information obtained by the retail investor (such as commissions), characteristics and risks of commonly used investment products.
- Skills and behaviours: acting or being able to act in a way that achieves positive outcomes using behaviours that are most likely to lead to financial well-being. For example, assessing the actual return on investment before choosing an investment product.
- Psychological patterns, confidence and motivation: internal psychological mechanisms that may inhibit/support informed decision-making and financial well-being. For example, the misconception among retail investors that past investment performance is indicative of future returns.
How do we promote The Investor's Journey?
To promote the course, we launched an ongoing advertising campaign targeting first-time investors who need help to get started trading on the stock market.
We use direct advertising on the resources that our target audience uses every day, such as search engines, social networks and video streaming platforms. To increase the effectiveness of advertising, we are constantly researching our audience, conducting surveys, analysing investor behaviour and using direct insights from them. We are testing new micro audience segments, new messages, creative formats and user communication channels.
We are also making efforts to attract organic traffic through MOEX’s website and the company's social media accounts. We are launching cross-marketing activities with partners such as brokers, educational platforms and streaming services.
The Investor's Journey has already helped hundreds of thousands of novice investors gain fundamentally important knowledge in the field of personal finance and investing. Beginner investors can – easily and free of charge – get qualitative and critically necessary knowledge.