By Andrew Welsch

On a late September evening, with summer's warmth still lingering in the New England air, about 200 of Fidelity's most prized brokerage customers sipped cocktails, nibbled hors d'oeuvres, and chatted about investing at the waterfront Institute of Contemporary Art in Boston. More than one attendee came bearing a well-worn copy of legendary Fidelity fund manager Peter Lynch's 1989 classic One Up on Wall Street. The crowd came to hear Lynch speak, and to try out Fidelity's new trading platform on stations staffed by experts.

For Boston-based Fidelity, the event served multiple purposes: to exhibit client appreciation, demonstrate the firm's rich history, and show off its new trading platform, Fidelity Trader+, which launched just days before the event. The platform offers more-robust tools and -- this is key -- an integrated experience across desktop, mobile, and web, so customers can now begin a trade on desktop and execute it later on mobile.

Competition to win over the growing ranks of active individual investors is heating up. "We think if we can deliver a broader, better offering, it can provide the impetus for them to switch to us," says Josh Krugman, Fidelity's head of brokerage product strategy.

Robinhood Markets is also rolling out the red carpet for active traders, or "complex investors," as some industry executives prefer to call them -- although each firm defines the group differently. In September, Robinhood hosted more than 1,000 individual investors in Las Vegas, where it treated them to go-kart racing and unveiled new capabilities for its active trader platform, Robinhood Legend.

The battle for individual investors pits legacy brands such as Charles Schwab, Interactive Brokers Group, and Fidelity against younger upstarts such as Robinhood and eToro Group, which went public earlier this year. Financial-services companies large and small are launching advanced trading platforms, extending trading hours, adding charting capabilities, and expanding the number of investment products available. They are also creating artificial-intelligence assistants to help retail investors identify trading opportunities and, in the case of Robinhood, unveiling plans for its own investing-focused social-media network.

"It's an arms race," says Steve Quirk, chief brokerage officer at Robinhood. "You have to keep delivering for people, or they will leave."

The result is a constant drumbeat of product announcements. In July, Interactive Brokers launched a new trading platform, IBKR Desktop. Less than three months later, the company introduced version 1.2 of the platform, which it says boasts more features, including an AI tool that provides portfolio insights and one-click, instant order transmission.

Super Users

Active traders are a highly sought after customer demographic because they tend to use more of a brokerage firm's services than less active traders. For example, they may trade cryptocurrencies, deploy options trading strategies, and use margin -- borrowing from their brokerage firm to buy stocks -- a profitable business for these companies.

Investors have been using a lot more margin this year. Margin debt hit a record $1.13 trillion through September, according to data from the Financial Industry Regulatory Authority. These activities boost brokerage firms' trading-based revenue and net interest income, which is the difference between what companies earn on interest-bearing assets and what they pay in interest on deposits.

Robust trading activity has boosted profits at brokerage firms. Robinhood's second-quarter equity trading volume and options contracts reached record levels. Schwab and Interactive Brokers reported surging second-quarter daily average trading volume of 38% and 49% year over year, respectively. Schwab's trading volumes have remained above seven million daily average revenue trades for the first eight months of this year, and Morgan Stanley's E*Trade notched just over 1 million such trades for the third quarter, a 24% increase.

Devin Ryan, head of financial technology research at Citizens, says the brokerage industry is an example of the so-called 80/20 rule in action: 20% of customers generate 80% of revenue, but the share of active traders may in fact be less than 20%. "There is a lot of competition for what is a relatively smaller number of investors," he says. In fact, many companies don't release figures or even say how they define the group. Interactive Brokers, which has 4.1 million customers, says about 250,000 of its accounts more than a thousand times a year.

Not Just for Day Traders

A few decades ago, investors could be more neatly broken into categories like "day traders" or "buy-and-hold investors." But now, brokerage executives say there is a blending of investor types, mainly thanks to technology. More retail investors are showing an interest in the tools and strategies deployed by active traders. Even clients with a financial advisor are increasingly opening self-directed brokerage accounts. "This [retail investor] population is growing," says Interactive Brokers founder Thomas Peterffy. "It's always growing during an extended bull market."

The percentage of investors who have self-directed accounts rose to 33% in 2025 from 24% in 2020, according to data from Broadridge Financial Solutions. Their assets are rising, too. Assets in self-directed accounts rose to 24% of assets from 17% over the same period, according to Broadridge.

Brokerage firms have been reporting steady growth in new accounts and more trading, especially this year, which has been marked by AI and tariffs. Schwab added 300,000 to 400,00 accounts every month for the past 12 months. Fidelity said second-quarter retail accounts and total daily average trades were up 13% and 34% year over year, respectively.

"We've seen growth in the total number of individuals and the total number of accounts, and the average age has decreased," says Fidelity's Krugman. "We are seeing younger customers come onto our platform. That's because the barriers to opening a new account are basically zero."

Live Events

Retail investors' interest in sophisticated trading strategies is showing up in other tangible ways. Charles Schwab plans to host two dozen in-person educational investing seminars this year, and the events are attracting thousands of both sophisticated and novice investors, according to the company.

Nearly 1,000 investors turned out for a recent Schwab event in Dallas, the largest one yet. Half of the attendees were what Schwab considers nontraders. "We can walk them through a variety of different topics," says James Kostulias, head of trading services at Schwab. "How to set up your workstation, how to analyze trades, how to think about options relative to your broader portfolio."

Kostulias adds that approximately half of the clients that log in to Schwab's thinkorswim trading platform wouldn't be classified as active traders. "These are investors who are very interested in the research tools, the education, and charting tools," he says.

John Bergdoll, 70, took a more hands-on approach to his portfolio in his 60s after he took a class on investing. A Boston-based self-described long-term investor and active researcher, he spends hours doing deep dives on individual companies. "First thing I do [in the morning] when my head is still on the pillow is I check CNBC and see how the markets are doing," he says. "I probably spend a couple hours right off the bat just reading and researching. It's my passion, my pursuit."

As Bergdoll attests, it's just so much easier and cheaper to trade today. The ranks of individual investors have been expanding ever since the Securities and Exchange Commission eliminated fixed brokerage commissions on May 1, 1975, known as May Day in the industry.

That paved the way for the growth of discount brokerage firms such as Charles Schwab -- and for commissions to progressively fall to zero. "When I opened my first brokerage account in 1996, I think it was $29.95 to make a trade," says John Bell, who was an executive at TD Ameritrade's investment management unit before starting his own financial planning practice.

Plus, it's far easier to get information about stocks and funds today than it was years ago. "There are so many online resources that provide free information, at least up to a certain point," says Peter Yaffe, 79, a self-directed investor and longtime Fidelity customer.

The pandemic accelerated trends, acting as a catalyst to propel millions of Americans to become first-time investors through free-trading apps offered by Robinhood, Webull, and other companies. Self-directed investors are now one of the fastest-growing parts of the brokerage industry.

While trading is easy, convincing customers they need to try out a new platform isn't easy. Ivan Jackson, who describes himself as a long-term investor, says he has been a Robinhood customer for years because of the firm's technology and innovations. And he figures if he's having a good experience, why make a change? "It would take something negative to move off a platform like Robinhood," he says.

Bergdoll says he tried Robinhood, but prefers Fidelity in part because of its customer service. "We're in a moment when tools like AI and analytics are changing how people trade, but the fundamental things like service and trust still matter to me," he says.

Side Benefits

Serving this group yields other benefits for brokerage firms. The active trader market can act as a laboratory for tools and services. "A lot of the things we have done for that population have rolled over to the broader population, the website, and the mobile app," says Adam Ely, head of digital products at Fidelity.

The customers also tend to branch out over time. Companies see an opportunity to provide active traders with retirement accounts and wealth management services -- and to provide brokerage services to clients who have a financial advisor.

Betterment CEO Sarah Levy says her company -- a pioneer among robo-advisors, which offer low-cost, professionally managed portfolios -- has experienced this firsthand. About 75% of Betterment customers have a self-directed account elsewhere. Betterment now plans to launch a self-directed offering. "We're not doing it because we want to encourage active trading, but because investors want to do both, and that is a reasonable thing," she says.

Levy says Betterment's self-directed platform will stand out in a crowded marketplace by offering features such as a tool that would enable investors to see the potential tax consequences of a trade.

Other financial-services companies are also making a go for customers' investing dollars. For example, JPMorgan Chase has been expanding its self-directed offering. SoFi Technologies, which got its start in student loans, has been expanding SoFi Invest, the company's self-directed investing platform.

And eToro, based in Israel, is trying to make inroads in the U.S., where the brokerage firm hopes to gain market share in part by offering an expanding suite of cryptocurrencies and an investing-focused social-media-type network. "We have millions of people commenting within our app about stocks -- the good, the bad, and the ugly -- from 75-plus countries," says Andrew McCormick, head of eToro US. "So, you get a great global viewpoint."

It's safe to say that no one is resting on their laurels. Fidelity's Krugman says the firm is already planning to add more features for Trader+ as well as its overall brokerage offering. As he says, investors expect nothing less.

Write to Andrew Welsch at andrew.welsch@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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October 16, 2025 01:00 ET (05:00 GMT)

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