The Rise of the Self-Directed Investor in a Digital Era

The increasing use of technology in financial services has led to an unprecedented level of transformation and democratization across the industry – particularly in the online brokerage space. With the rise of services that allow investors to manage their wealth independently, the role of financial advisors is changing drastically. In a recent webinar presented by Scivantage and Celent titled, Industry Spotlight: Online Brokerage Market Assessment and Outlook, Isabella Fonseca, Research Director at Celent, and Chris Psaltos, Vice President, Product Management at Scivantage, discuss the growth of a new self-directed segment of investors and the key trends that are driving this transformation.

Over the past two years, the total number of brokerage customer accounts has grown significantly, and the types of retail investors engaging in this industry continue to diversify. As the market evolves, demands have changed, and investors are expecting a more streamlined, hands-on trading experience. This shift has led to a significant increase in the self-directed population of traders, as well as an evolved investor profile. Women, millennials, retirees and baby boomers are making up a greater percentage of today’s traders, as they place greater focus on their personal investment strategies, and advisor services are changing to optimally respond to the habits and interests of these individuals.

The explosion of online and mobile interfaces in financial services is a result of this changed demographic. Since 2012, the daily average revenue trades (DARTs) occurring via mobile trading platforms have grown by 13% and activity in this area continues to be on the rise. As a result, digitalization is increasingly inseparable from the advisor-investor conversation. Therefore, the renewed focus on the self-directed investor and their use of digital platforms has required advisors to integrate a new level of transparency, personalization and socialization into their products and services. Through these changes, brokerages are better equipped to offer clients the information-enabled tools they need to direct their own investments, while also having access to advisor counsel and support.

This hybrid model is evident in brokerages’ increasing adoption of “desktop-on-the-go” technologies and other tablet-based applications that can be used to maintain and build client relationships. The range of remote servicing options and functionalities (e.g., video, tablet and chat) available to bank and brokerage advisors has increased considerably, enabling advisors to align their services with the changing needs of today’s retail investors. Social media also plays a noteworthy role, and brokerages will continue to establish their presence on these platforms to attract new clients and to provide a seamless investor experience across all digital channels.

Brokerages have also begun to offer more educational services that appeal to the new self-directed investor, including webinars and in-person seminars that can be accessed on an individual, as-needed basis. As the online brokerage market continues to develop and diversify, Celent expects these services to become increasingly widespread and in-demand.

For more information, download the full Celent report, “The State of Online Brokerage Platforms.”


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