Investing is beginning to reach further into the mass market. Our latest Consumer Insights research shows that 29% of British adults are investors, a steady increase over the past couple of years.
While the robos have been the cheerleaders of the ‘democratisation of investing,’ it’s likely to be others that benefit most. In fact, it turns out that banks have overtaken professional advisers as investors’ favourite choice of ‘financial partner’. Banks are also the most frequently used provider of investments and they are increasingly used by younger investors. This clear potential with new investors will be encouraging for several banks that are bringing new investing propositions to market at the moment. If the banks are successful, we may see the robos confined to bit part roles within other peoples’ propositions.
Hargreaves Lansdown is also looking to address a wider audience by making investing simpler. This week’s launch of a more compact select list – The Wealth 50 – is central to engaging with less experienced investors and those who currently use financial advisers.
Financial advisers complain that execution-only services are allowed to provide many of the benefits of advice but without having the meet the FCA’s stringent requirements for factfinding and suitability. The trend towards shorter lists (Interactive Investor also launched a new list of 60 funds this week) heightens that tension.
However, the regulator has ducked many opportunities to intervene with D2C select lists since the RDR – perhaps because they meet a clear consumer need. We expect their distribution potency to increase and asset managers should note that wider participation in investing may lead to a narrowing of distribution channels and an increase in fund concentration.