We will shortly reach our 10-year anniversary of covering the UK D2C market. Our latest UK D2C: Market Overview will come out next week and we have mixed feelings about progress in the sector. Online investing services are much better than they used to be: easier to use and the technology has improved. Some D2C services are even designed for real people who find investing complicated. But the number of active accounts on direct platforms has only doubled since 2010. Frankly we expected better!

Few D2C players have enjoyed success – and growth has been unevenly spread. Hargreaves Lansdown’s market share has shot up from 29% to a dominant 42%, FNZ manages enough of the outsourced tech market to attract the CMA’s attention, and Vanguard’s online service is doing spectacularly well, even as other asset managers look for ways to offload their D2C books.

Yet for many other players, it’s been tough. The internet has made the market more efficient,  benefiting consumers, but eroding margins. Scale is required to compete, and D2C competition is fierce with high customer acquisition costs. Growing the market by bringing in new investors has proved extraordinarily difficult. Some of the smaller platforms and robo advisers are disappearing, and many firms are instead focusing on inorganic growth. Consolidation is rampant, and we’re expecting more.

Where do we see opportunity?

  • Guidance is good but many people really want advice

First generation robo advice wasn’t what they wanted. Robo 2.0 will be a better hybrid and served up by all sorts of established companies as well as a few successful start-ups.

  • Bringing together online saving and investing

Banks are thinking about how they should offer investing to their savers, while investment platforms are bolting on cash savings services. The cash savings market is far larger than the current D2C market – there’s a huge opportunity for groups that manage to bridge the gap.

  • What about the workplace?

DC pensions through payroll are going to mop up much of  younger people’s capacity for investing. Will workplace pension providers innovate  enough to improve the currently dire levels of consumer engagement? Not sure the workplace ISA  will ever get airborne but we’re hearing more about workplace share plans.

Differentiation is now crucial in the D2C market. The successful propositions of the 20s will have laser accurate positioning and perfect execution.

To find out more about this report, download a report outline here. Subscribers to our UK D2C research are also invited to our analyst briefing on Tuesday 25th February where we will be discussing the latest trends and findings.