Guiding the new wave of DIY investors

Whether determined not to be caught out again, or seeking to take control of their financial future, since the arrival of the pandemic, people have flocked to retail investing platforms as never before. More.

 
Adviser platforms have reported improved flows over the last two quarters but it is online investing services that have seen a huge increase in demand – as reported by Andrew Ashwood at Platforum.

Platforum is a research consultancy analysing trends in retail and wholesale investment distribution, and it set about finding where new DIY investors are signing up, and what is influencing them?

‘Traditional’ direct to consumer (D2C) platforms, including Hargreaves Lansdown and AJ Bell Youinvest, saw surges in customer numbers in 2020; many platforms reported record levels of account opening and transactions as investors sought to take advantage of markets’ rapid resurgence following the vertiginous Covid slump.

Investors also flocked to the new breed of investing services, focusing on low-cost share dealing and high-risk investments like CFDs, spread betting and cryptoassets; Trading 212 said that it added one-million new customers in 12 months, bringing £2.5bn of assets under management and going from 15,ooo stock trades per day to 1.5m.

Platforum reports that many first-time investors start with share dealing and some brokers are contemplating how to convert them into longer-term customers before they suffer losses or lose interest.

It’s recent report – UK D2C: Investment Distribution – examined the guidance on offer from direct platforms; select lists, multi-asset funds and ready-made portfolios are the most commonly used methods along with a steady helping of editorial content.

Sixteen direct platforms offer a select list and these exert significant influence as just under a third of gross flows go into a select list product.

Brokers’ own-brand funds are also popular for new and more experienced investors alike; they offer access to risk-targeted solutions from the company they are already entrusting custody of their assets to.

Online investing providers serve a wide range of investors with very different needs and requirements; the range of services available, and fees levied, adds further complexity even before investors decide where to put their money.

Platforum concludes that it has seen a new cohort of retail investors arrive but, as has been the case in the past, the services that are successful with engaging consumers will produce steadier recurring revenue and long-term growth.