The explosion in DIY investing since the start of the pandemic has led to a scramble among Britain’s more traditional asset managers and banks to buy or build online platforms that give consumers more direct control of their investment portfolios.
While the ‘meme stock’ frenzy that saw a rush by consumers to buy shares in companies talked up on social media such as Gamestop has simmered down a notch, there’s still a growth in demand from people to pick their own investments or tailored wealth products.
This month abrdn bought interactive investor for £1.5 billion ($1.98 billion) while earlier this year banks JPMorgan and Lloyds snapped up wealth platforms Nutmeg and Embark respectively to bolt-on more customer-friendly digital products.
“If you don’t move as an incumbent, you are in trouble. No doubt,” Antonio Lorenzo, head of insurance and wealth at Lloyds, told Reuters.
Platforms offering investment tools directly to consumers are the fastest growing part of the consumer investment industry, according to data shared with Reuters by research firm Platforum.
Assets under administration at these direct platforms jumped 40% to £289 billion in the year to March, making up a third of the consumer market. Research firm Fundscape forecasts the market will more than double in size to £658 billion by 2026.
Independent online platform Freetrade says its assets had leapt to 1.1 billion pounds, from 240 million prior to the pandemic. Its best month for sign-ups was October with 115,000 joiners, compared to 75,000 in February at the height of the meme stocks phenomenon typified by social media favourite Gamestop.
“Gamestop was a catalyst for sure, but it’s not like that was the peak,” Freetrade co-founder Viktor Nebehaj said.
“It’s obvious to us that investment accounts are going to be as normal as bank accounts.”
Britain may not be as synonymous with have-a-go investors as the United States, but it’s growing a more lively retail investor community.
Around 14% of adults in Britain are interested in automated investing, behind the U.S. (16%) but ahead of France (12%), surveys by Forrester show.
UK consumers posted the highest rise in the world of those likely to invest in future, at 58% from 41% pre-pandemic, according to a survey by fund network Calastone.
More than half of new investors – with less than two years’ experience – are less than 35 years old, according to a survey by Oliver Wyman in October. Freetrade said over 55% of its new customers were first-time investors.
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