The Education Imperative

These are truly unique times for investors—filled with opportunity and seismic change. People today have more access to the markets than they’ve ever had before, which has led to unprecedented levels of trading activity and trader engagement. It has also underscored the need for level-appropriate education tools and resources that reflect the needs and situation of today’s investors. But what does that look like?  

To answer that, some context helps. Let’s consider how the landscape for traders has changed.  

• There are more opportunities in today’s market: From wholly new vehicles like cryptocurrencies and ESG to rapid moves in individual stocks and volatile swings up and down in the broad markets, the range of possibilities open to investors today is great and ever-expanding. Add to that the elimination of equity and ETF trading commissions, and the result has been enormous levels of interest and engagement as investors seek out opportunities. 

• Access to information has exploded: Many newer investors are getting their trading ideas from social media platforms and online forums. This isn’t an entirely new phenomenon. Twitter and Reddit today look a little like Yahoo message boards did in the late 90s and early 2000s. But the sheer volume of information, research and opinion out there is extraordinary, and it is very clearly driving engagement and influencing buying decisions.  

• Sophisticated trading tools and resources have been democratized: Individual traders now have many of the same professional-quality tools, platforms and research as portfolio managers.  Having that power at their fingertips has leveled the playing field and empowered investors to trade more often, in more products. 

This new landscape has led to rapid growth in investors’ desire to participate in the market. Schwab combined with TD Ameritrade acquired over 3 million new retail clients in 2021, the largest number of new retail clients in a single year ever. 

Half of the new investors at Schwab and TD Ameritrade are under the age of 40.  Many are under 30. And all of them have experienced together one of the biggest market rallies in history. 

The increase in engagement and activity has seen a correlated increase in engagement with education, and that is exactly what we want to see. As people invest their money, they are also investing time in growing their knowledge.

Just like in other parts of life, education should be an active ongoing exercise with no real endpoint. If we look at traders, they are some of our most engaged consumers of education and content. They are constantly seeking to improve their understanding of the markets, get ideas to give them an edge, and maximize the utility of our platforms and products. 

It’s our job to equip every one of our clients with the information and insights they need in real time and prove ourselves to be a trusted source in a world that is fast and noisy. With that in mind, we see modern investor education as having three components:  

• A personalized, immersive digital experience: Today’s investors want and need a wide variety of content and formats—articles, videos, podcasts, courses, live-events—curated by level or goal. The content needs to be personalized based on what clients are interested in and need. And it has to come from a trusted, reliable source, be timely and easy to understand.  

• A sense of community: Traders particularly have always participated in idea sharing with their peers—crowdsourcing information in chat rooms, live events and elsewhere. This is only increasing among investors today. We did a study recently that found one quarter (26%) of traders say what they enjoy most about trading is the community of other traders they’ve found. The same study found the top three sources traders use to help make decisions are social media (23%), friends/family (20%) and online forums like Reddit and Digg (19%). But with the increase in the amount of information swirling, sometimes from less credible sources, they also seek a place for reliable information and a place to validate what they learn. So, education needs to include a live, interactive component so traders can seek coaching and apply their knowledge in real-time with their peers as well as experts. The coaching offering at TDA and Schwab whereby investors can watch and learn in real time from education coaches is invaluable to investors, as it teaches application of concepts and risk management on trading platforms that they use.  

• Experiential learning: Education can’t be compartmentalized in a standalone “education corner.” It has to be a central component of the investing experience. Tools built right into trading platforms help traders make more informed decisions. TD Ameritrade’s thinkorswim PaperMoney Platform, for example, allows traders to trade with no money on the line so that before they invest in a real environment, they learn to place trades, manage positions and their overall portfolio, understand risks, and learn to use the platform. It’s a great example of education being about more than building knowledge. It’s about testing it too.

Over the last five years, the level, range and sophistication of educational resources that firms like Schwab and TD Ameritrade offer clients has taken scale steps forward. The good news is that our trader clients are using the educational resources we provide in a big way. TD Ameritrade Education Offering saw record engagement, particularly with its video content at 19 million views and its written Tickertape content with 13.4 million views. Schwab Insights and Education content, which provides commentary on market events, as well as resources for trading and long-term investing had more than 24 million views last year. The TD Ameritrade Network had more than 26 million views of its financial news and insights in 2021. 

As we move towards the future, our commitment to providing valuable insights and education content to investors is steadfast and ever growing. Investing in the markets means investing in knowledge and we will continue to provide exactly that so our clients can be successful in their endeavors.