The last 12 months have been transformational for providers across the retail investing spectrum. Adviser platform flows have picked up over the last two quarters but it’s online investing services that have seen a huge increase in demand.
Where are these new DIY investors deciding to invest and what is influencing them? Direct platforms, including Hargreaves Lansdown and AJ Bell Youinvest, have seen surges in customer numbers in 2020. Though, these investors are also flocking to a new breed of investing service, focusing on low-cost share dealing and high-risk investments like CFDs, spread betting and cryptoassets. In 12 months, Trading 212 claims to have added 1m customers with over £2.5bn AUM, going from 15k stock trades per day to 1.5m.
Many of these first-time investors start with share dealing and some services are thinking about how to convert them into longer-term customers before they suffer losses or lose interest. We examined the guidance on offer from direct platforms in our recent report, UK D2C: Investment Distribution. Select lists, multi-asset funds and ready-made portfolios are the most commonly used methods along with a steady helping of editorial content.
16 direct platforms offer a select list and these exert significant influence – just under a third of gross flows go into a select list product. Own-brand funds are also popular for new and more experienced investors alike, enabling access to risk-targeted solutions from the company they are already entrusting custody of their assets to.
All online investing providers serve a wide range of investors with very different needs and requirements. The range of services available adds further complexity before investors embark on deciding what to invest in. We have 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.
We have just published our UK D2C: Investment Distribution report, looking at how investment products are distributed through the UK direct-to-consumer (D2C) channel. Download an outline of the report here. You can find out more about our UK D2C research here.