We can only control what’s in our sphere of influence or in sporting language – to play what’s in front of us. So, regardless of external factors beyond our control, it’s the end-consumer – the investor – who we need to react to. As we head into 2017 what is he or she thinking and doing?
Platforum’s first report of the year, Consumer Insights looks at trends over the last six years and then compares and contrasts advised with self-directed investor behaviour. What are the key points this year?
- Price matters more
It always did to the industry but now ‘a competitive price’ has become the top consideration for investors choosing a service. Brand is still more important to younger investors and when offered a choice, fixed price is favoured 2:1 over percentage charging.
- The number of savers and investors is down
Possibly as a direct result of Brexit, Trump et al… but not necessarily. These numbers fluctuate from year to year and tend to mirror economic confidence. When uncertainty is high, people are more likely to tell us they don’t have savings or investments. Either way it may be a less target-rich environment for asset gathering for now.
- Consumers like investment solutions and active funds
Investment solutions, like multi-asset funds, are popular and despite continued criticism of active management, consumers still favour investments that look and feel like active. While active managers may take solace from this, advisers control the majority of retail flows to funds. We will be reporting in a few weeks on their plans for using passive versus active products in 2017 to see if appetite has grown for passives since the Asset Management Market Review interim report.
- DIY investing is increasing
We track the number of people who say they are advised or self-directed and, while those who do both remains the largest group, we saw a big shift towards DIY and away from full advice this year. We think we are beginning to see a delayed reaction to the RDR. With investors becoming more aware of the fees they are paying for advice, they are weighing up their options. 74% of investors now say they are entirely or mostly self-directed. Only 7% say they are exclusively advised.
We’ll update subscribers in the summer on whether the next survey confirms this trend but we may be seeing a case in point of Bill Gates’s comment on how: “we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”
The impact of the internet/RDR double-whammy is still in play and to draw once more on Bill Gates’s wisdom: “Don’t let yourself be lulled into inaction.”