DIY Investing in rude health – but keep ’em peeled

The 2024 Online Investing Report, commisioned by Boring Money described a very healthy DIY investing scene, and one that is going from strength to strength, as people take more personal financial responsibility

 
A research panel of more than 10,000, identified that at £10 trillion, the UK asset management industry is the second biggest in the world.

Its recently updated figures say there are now 10.6 million DIY investment accounts operated in the UK, containing a colossal £440 billion – 14% year-on-year growth.

Overall there has been a 56% growth in the number of accounts since 2020.
 

The report found that: 

• 32% of UK adults hold an investment product

• Nearly 6 in 10 of all investors are men and the average age is 51 and falling; the rise in the number of total investors has been driven by the increase in younger men (aged 25-44) investing

• The Gender Investment Gap increased in 2023 – 60/40 men vs women.

• A third of British investors have less than five years’ experience of stock markets and a third of investors display at least one characteristic of vulnerability.

 
It found that 7% of investors have less than 12 months’ experience and a substantial proportion of investors have less than 5 years’ experience; the average investor has been investing for a little over 10 years, so has not experienced a prolonged crash or recession.
 

In terms of where and how they invest:

• The top 5 platforms – Hargreaves Lansdown, AJ Bell, interactive investor, Fidelity and Vanguard – retain a powerful market share of 72%, but in terms of customer growth, robo advisors continued to perform best, growing market share by customer accounts to 22%.

• Vanguard’s market share by £ has risen 10x since 2019.

• Over-55s strongly prefer people over tech-enabled service, and this age bracket also prefers desktop over mobile.

• A significant majority of those who have engaged with their investments over the last 12 months have done so on mobile, but mobile engagement has plateaued after years of growth

• Average platform fees for an ISA have fallen to their lowest ever average.

 
These young account holders have accounted for the growth in market share of robo advisers who now have 22% of all DIY investors, the report revealed.

54% of investors use more than one platform – the strongest has 67% customers as their main platform, the worst 32%.

It also found 42% of investors said they have never used a financial adviser, while 34% said they have done in the past.
 

What are they investing in?

23% of UK money is invested in US tech stocks and there is huge concentration risk with the US stock market rising from 40% to 70% of value across all markets; the top 10 of the S&P 500 have gone from approxmately 10% of the index to almost 33%

The regulatory risk of these largest stocks is high, because of the likely/pending need to regulate for AI.

It is estimated that 12.4 million people, with assets of £700 billion are in the advice gap created by the 2012 Retail Distribution Review, and that the FCA’s Consumer Duty initiative could add to the gap.
 
Chief executive of Boring Money, Holly Mackay said: “Just one-quarter of Brits who have investment products currently get financial advice. With the ripple effect of consumer duty and a scrutiny on service levels and ongoing servicing underway, it is unlikely that this number will grow with today’s servicing models.
 
“This makes the current advice/guidance boundary review more critical than ever, as the advice gap looks set to grow.”
 
The average advised customer reported their assets increased by 15% from 2023 to £245,573, while the average DIY investor reported their total invested assets at £84,359.

The report also revealed many advised customers continue to hold a DIY investment account as well as account proliferation in 2024.

22% of those using a DIY investment platform also have a financial adviser and according to Boring Money these customers are most likely to use Aviva and Fidelity for their DIY accounts.

This comes after research from Hargreaves Lansdown last year (August 2023) found a fifth of young investors get their stock tips and market forecasts from Instagram.

Figures from an Opinium Survey of 2,000 people carried out for Hargreaves Lansdown in May 2023 found other social media sites were also popular with young investors – defined as aged from 18 to 34 – with 16% turning to Facebook, 14% sourcing ideas from Reddit and 8% looking on TikTok.
 
DIY Investor has been batting hard for the need for improved financial education and engagement since its launch in 2014.

A decade ago things looked very different, when there were around 2.3 million people actively manging their finances; things changed dramatically when Covid came along and those with time on their hands, cash in their pocket and the incentive delivered by financial uncertainty swelled the number of DIY investment accounts to something over 6million.
 
Lockdown 2.0: Increasing numbers take personal financial responsibility and turn to DIY investing >
 
Coronavirus Lockdown Fuels Spike in DIY Investing >
 
However, with the energy crisis, war in Ukraine and the cost of living crisis, the black swan events kept on coming, and the fact that Boring Money’s research suggests that there are now more than 10 million accounts with people actively managing their money suggests that behavioural change is baked on.

DIY Investor is full of education and insight and there will be something ideal for you; a good entry level piece is:
 
Rainy day funds under water and the need for better financial education >
 
What is certain is that there is a huge need for well-targeted and engaging education and content, and that the information requirements of those contemplating, or new to investing are very different from those previously ‘in the know’.

We recognise that AI and social media will inevitably play a role as savers turn to investing and plot their course to financial independence, but believe that until a machine can experience the night sweats and stomach-churning anxiety of a lack of financial control, we are going to stick with our current plan – real people, with real money, facing challenges just like yours.