The UK D2C market was upbeat over 2024 in terms of assets, flows and customer acquisition. A longer perspective reveals significant shifts in the make-up of this distribution channel.
Self-directed investors have become more price sensitive. This has been led by those actively marketing themselves as low-cost providers and by others with new approaches, like free-trading, that are proving popular with younger investors.
Neo-brokers have benefited from the price competition but face other challenges. Debt to finance customer acquisition is more expensive and without cross-selling risky investments like CFDs, it’s unclear what sustainable business models will look like.
At the other end of the scale spectrum, Hargreaves Lansdown may have more leeway to adjust pricing as a private company, but this isn’t typically in the private equity playbook. It also needs to align with demand favouring all-in-one solutions.
Inflows into in-house ready-made investments and managed services have been strong and we expect more marketing focus here. Guidance will be refined by the Advice Guidance Boundary Review with the advice gap addressed most effectively from the non-advised side. We expect this to lead to a doubling in the size of the D2C market within the next seven years.
We recently published our UK D2C: Market Overview report. For more information, please get in touch.