UK Direct-to-Consumer (D2C) assets passed the £500 billion mark by the end of Q1 2024, but it was strong investment performance rather than net flows that drove assets higher.
Much of the D2C market is dominated by direct platforms that offer open-architecture services, providing access to individual stocks and shares as well as funds from various asset managers. In contrast, the more limited services available directly from asset managers and retail banks have been steadily losing market share.
The D2C market caters well for its current base of seasoned investors but must expand beyond this and attract many more younger and less experienced customers.
In pursuit of new investors, D2C providers are shifting towards offering more streamlined and simplified investment solutions. Direct platforms have been enhancing the guided journeys available to clients and launching their own multi-asset investment solutions. Non-platform services are also having success with more limited solutions. For instance, Vanguard has grown at pace with its simple, low-cost investment approach, while Moneybox is gaining traction with a differentiated offering focusing on aspiring homeowners.
Neo-brokers like eToro and Trading 212 have also been attracting new investors, who are drawn to high-profile investments like US equities (e.g., NVIDIA and Tesla) or cryptocurrencies, which they think will give them big returns and quickly.
D2C services face a strategic dilemma: should they focus on offering safer, more conservative investment options to attract and nurture less experienced investors, or should they tap into the enthusiasm of share traders, potentially guiding them towards more sustainable investment practices?
It’s against this dynamic backdrop of change and growth in the D2C market that a private equity consortium is eyeing Hargreaves Lansdown. The question is whether and how the Hargreaves Lansdown behemoth will adapt to this new and very different emerging environment.
Platforum recently published UK D2C: Market Update, our mid-year update of market size and analysis of major market trends. For more information, please get in touch.