DIY investing comes of age

When DIY Investor was conceived, it was in the absolute belief that people would inevitably have to take more financial control as personal responsibility replaced state provision – by Christian Leeming

 
Whilst ‘401k’ conversations have long featured around US dinner tables, for many on this side of the Pond, money was never a particularly comfortable topic of conversation, and the safety net provided by the welfare state was pretty robust.

However, faced with the increasing cost of accommodation, the imposition of tuition fees, and growing uncertainty around later-life provision and healthcare, people started to turn to DIY investing in greater numbers, with ‘being in control’ seen as one of the key benefits.

That trend rapidly accelerated when Covid came along as those faced with great uncertainty suddenly found themselves with time on their hands and often money in their pockets; brokers and investment platforms reported accounts being opened in record numbers.
 
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With the behaviour of black swans apparently approximating that of buses they just kept coming; war in Ukraine, soaring inflation, cost-of-living and energy crises and rising interest rates fanned the flames of uncertainty, and the number of DIY investors hit 6m. 

With democratising investing and growing the market as cornerstones of our proposition, that was music to our ears, but we also recognised the importance of serving this new audience with information appropriate to their experience and level of knowledge. 

A survey conducted by DIY Investor in May 2022 confirmed that levels of financial literacy among those new to investing were lower than that of many experienced investors and confirmed the need to maintain our two-speed editorial approach by delivering education to those new to investment and information to allow existing investors to make informed decisions. 

Inevitably, there were causes to remind those new to investing to keep both eyes open. 

 
 
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There was also some risky behaviour, particularly as younger investors were tempted to try to time markets, pile into meme stocks and give crypto a whirl. 

 
 
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Now, as ISA season hits its straps, tuning in your Roberts or flicking on Cash in the Attic will confirm that DIY Investing is now mainstream, as you will encounter adverts for investment platforms and even individual investments as never before. 

It’s a big and bold move, the efficacy of which will no doubt become clear over time.  

One thing the asset management industry has wrangled with over time has been the ability to extol the virtues of a product, particularly to a retail audience, in a way that is deemed to be ‘compliant’.  

Trying to allude to benefits or improved personal circumstances whilst not being able to use words such as ‘would’ ‘could’ or ‘should’ becomes a challenge; don’t even bother to try to smuggle ‘will’ through. 

A true story is that an early submission to DIY Investor Magazine was approximately 950 words long, with a 1500-word disclaimer! 

In the eight years since then product managers have become far more adept at serving content in an appropriate and engaging way. 

Coming with an ‘ear-worm’ risk warning attached to the Vanguard ad, here are some current offerings. 

 
Clearly, as execution only platforms, they cannot allude to any potential outcomes; those bobbing along with the FTSE 100 at 8,000 may have felt pretty flush, whereas those that bailed out following the Covid crash may still be feeling a little raw. 

These advertisements are therefore pretty much limited to increasing brand awareness, and whilst the message that it is better to do something than to do nothing is completely laudable, the role of trusted sources such as DIY investor must always be there to deliver education and content in their support. 

Part of our mantra has always been that whether you take advice, use a ready made investment solution, or are sufficiently confident to make your own investment decisions, it is always better to be engaged – ‘Do it Yourself, Do it With me, Do it For me – just don’t do nothing!’ as we would say, with due deference to Nike. 

I’m not sure how the creative agency sold Bestinvest on the idea of a giant, talking merkin; smacks of a good lunch, but no worse than any other I suppose in terms of making investing ‘accessible’.  

They may deliver ‘trading’ platforms, but it is the behaviour of long-term investing that should be constantly reinforced; none of them has apparently yet adopted the ‘Get Rich Slow’ slogan. 

Going from the relative precision of marketing in ‘traditional’ media, must considerably affect the cost of client acquisition in a sector with notoriously fine margins; particularly when faced with a range of ultra low-cost trading apps. 

A new one on me was the advertisement for Witan Investment Trust that barged into the Bath vs Bristol game on Friday night; this is the first time I had seen a TV for an individual trust. 
 

 
Over time, Witan has always appeared near the top of a list of most actively promoted funds, and has reaped the benefits; the audience feels right, but I’m not sure how much it costs to run an ad on BT Sport, and what ROI will be reported to the trust’s board. I suspect that for many trusts, such an expense may not be possible.

On YouTube the video has just 80 views and Witan has just four subscribers. 

It will be very interesting to see how the use of mainstream media affects DIY investing, and whether the not inconsiderable outlay will deliver results. 

Meanwhile, DIY Investor is currently working on a new initiative to deliver content in an affordable and appropriate fashion, whilst facilitating access to much more in-depth content as required; more information will be released shortly. 

What seems certain is that the growth of DIY investing will continue apace.  

A recent survey from Finder said that 33% of Brits currently own shares, and that 67% of the remaining population say they plan to buy stocks and shares in the future.  

75% of Gen Z and 74% of millennials plan to buy stocks and shares in the future, and the fact that only 2.2m people (3%) in the UK are subscribed to a stocks and shares ISA shows the massive potential to turn savers into investors. 
  
 
 
In the meantime, here is a very personal case study that highlights why opening an account is only the start; the journey to financial independence is based on constantly learning, and adapting as personal circumstances and external influences change. 

 
 
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