DIY investing boom continues apace

There has been a well-documented boom in DIY investing during the pandemic as those with more cash in the bank and time on their hands have sought to take advantage of resurgent markets and identify the sectors that are likely to emerge the strongest – writes Christian Leeming

However, this growth has not just been more of the same; younger people have taken to investing as never before and with a long investment horizon and potentially decades of compound interest it may be that Covid-19 prompted the shift towards financial self-reliance.

Recent analysis from Boring Money found that there is now a record £329bn invested via D2C investing services in the UK, including DIY investing platforms, robo advisers and bank share dealing platforms; the UK’s largest DIY investing platform, Hargreaves Lansdown, added 126,000 clients to reach 1.62m users for the four-month period ending April 2021.

Customer numbers across platforms have grown by 20% to top 7 million for the first-time, with growth fuelled by younger investors opening an investment account for the first time. Boring Money’s research indicates that 9% of all current investors opened their first account in the last year.

Strong customer growth combined with a strong stock market recovery means assets under administration (AUA) across the market have grown more than £100bn year on year to £329bn; this following a sharp drop in early 2020 triggered by the outbreak of the Covid-19 pandemic.

Other notable trends include:
 

• Growth among share dealing platforms, catering primarily to traders: Boring Money found quarterly AUA growth in excess of 10% among some of the largest share dealing platforms
• Robo advisers catering to less confident investors: Robos had a strong quarter with Nutmeg claiming a 33% market share and reaching £3bn under management for the first time.
• Cost conscious investors: Vanguard continues to gain traction, growing by 30% in Q1 to assets of £6.7bn.
• The ‘buy and hold’ platforms such as AJ Bell and Hargreaves Lansdown continue to be the leading platforms for those seeking a long-term home for shares and funds and command a huge share of overall AUA

 
Boring Money CEO, Holly Mackay, says: ‘The DIY market continues to evolve and is no longer the domain of older, golf-playing hobbyists in Surrey. Average ages are falling and first-time investor numbers are growing.

‘Our data shows that there has been a surge in new, young account holders, and 9% of all investors have been investing for 12 months or less. This is reflected in the fact that the average age of a new customer with the market’s largest provider is just 36.

‘However, the growth in customer numbers hides the fact that volatile markets have also rocked confidence. Our Advice Report 2021 confirms that 76% of all investors rate their confidence at just 6 or less out of 10. Few investors are truly confident managing their money, yet advice remains the preserve of the wealthy – just 3.6m customers in the UK have a financial adviser today.

‘It is great to see so many people investing and taking control of their money. But with this comes a growing need to figure out how to offer better advice to the average person on the street.’