Since the downturn in the investment markets in 2008 and 2009, investors have taken more control over their investment portfolios, leading to a growing demand for self-directed options from the wealth management industry, according to a research report released today by Scivantage and Aite Group.
Scivantage, a provider of Web-based, front- and middle-office technology solutions to the financial services industry, and Aite Group, an independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry, paired up to study the growth in the self-directed investor market and the opportunities that presents to wealth management firms and financial advisors.
“Consumers’ increasing desire for control over their financial outlook has led to a growing demand for self‐directed solutions from investors in higher wealth segments,” said Alois Pirker, research director at Aite Group and author of the report. “Over the next decade, we anticipate that wealth management firms will provide investors with several multi‐channel offers to appeal to their growing demand for online access to information and tools. Firms that provide a self‐directed investing solution will hold an advantage over those that do not, as they will be better positioned to capitalize on the latest consumer technologies and online investing innovations.”
Other major findings of “Blurring the Lines: The Impact and Important of Self-Directed Investing in Wealth Management” were:
- Online brokers have gained a 3 percent market share from full‐service firms in both 2009 and 2010 in the U.S., while most types of full‐service brokerage firms either lost or maintained market share
- Financial advisors to high‐net‐worth investors estimate that about 25 percent of their clients have a self‐directed account and a financial advisor
- Of the banks surveyed that currently lack a self‐directed offering, about half have plans to introduce such a service in the near future
- Half of the 19 North American banks surveyed are enhancing their online channel in various capacities
- The research found that an opportunity exists for meeting the needs of younger generations that have grown accustomed to accessing and purchasing products and services, both offline and online
- More than half of the U.S. financial advisors surveyed in Aite Group’s annual review of 400 advisors stated their firm does not offer a self-directed channel
“The technological innovations over the past 10 years have forever changed the way that consumers want to interact with their financial services firms,” said Joe Stensland, senior vice president and managing director of wealth management solutions at Scivantage. “Our wealth management clients are looking to invest in a direct business model to cater to the needs of clients in a way that is scalable and cost‐effective. Having one platform in place that offers both, the full-service and the self-directed model, gives firms the potential to provide more options in products and services, and help grow their business.”