Wealthy DIY Investors Don’t Need Financial Advice

IFAs are fast becoming irrelevant to a new breed of wealthy and sophisticated investors ready to take on managing their own money.

Research shows that DIY investors feel competent dealing with their own portfolios with little professional help.

Online platforms and robo-advice are making their task even easier, says research by Cerulli Associates, who spoke to 1,000 investors with at least €200,000 (£172,500) of investable assets.

Almost two thirds (60%) of wealthy investors in the UK replied they were ‘fairly’ or ‘very’ confident that they could manage DIY investing.

Managing director Barbara Wall said: “Investors might not have the time to build and monitor a portfolio and they do not necessarily believe that they could do so better than their advisers.

Robo advice welcomed

“Nevertheless, they feel that they could get by with a minimum level of guidance.”

“The high confidence among investors in sophisticated markets reflects the level of financial education in Europe; it also suggests that investors might have a limited regard for professional advice.”

The report also revealed 42% of investors would consider managing their money with automated online investment tools.

Meanwhile, separate research by Coinvestor concludes that financial firms should harness technology to stay attractive to younger investors who have grown up in a digital age.

These investors are unlikely to want to deal with traditional IFAs and are more likely to access online automated advice through smartphones or tablets.

Digital platforms

“Wealth managers need to consider their current business models and how best to bring themselves into the digital age,” says Coinvestor.

“As with any industry some firms ‘get this’ and are producing innovative approaches to the market. Other firms seem wedded to an old-fashioned view that advice must be face to face.

“The answer, as always, will lie somewhere between these two extremes but it remains highly likely that to acquire a next generation client wealth management firms will need some form of digital platform.”

The company argues that advances in big data will aid financial decision making even if people do not realise technology is driving their experience.

An example is bank accounts sweeping small amounts in current accounts into savings automatically – a combination of data-driven decision making happening behind the scenes.