Daily Management Review

UK Wealth Market Impacted By Pandemic Have-A-Go Investors


UK Wealth Market Impacted By Pandemic Have-A-Go Investors
Since the outbreak of the pandemic, DIY investing has exploded. This has caused traditional asset managers and banks in Britain to scramble to build or buy online platforms that allow consumers to have more control over their investment portfolios.
The'meme stock' frenzy, which saw consumers rush to buy shares of companies discussed on social media like Gamestop, has slowed down a bit. However there is still a growing demand for people to choose their own investments and tailored wealth products.
Abrdn purchased interactive investor last month for 1.5 billion pounds ($1.98 Billion). Earlier this year, JPMorgan and Lloyds bought wealth platforms Nutmeg (and Embark) to add more customer-friendly digital offerings.
"If you don't move as an incumbent, you are in trouble. No doubt," Antonio Lorenzo, head of insurance and wealth at Lloyds, told Reuters.
According to data from Platforum, platforms that offer investment tools directly to consumers is the fastest-growing segment of the consumer investment market.
These direct platforms have a 33% share of the consumer market, with assets under administration rising to 289 billion pounds.
Many of the industry's most prominent players stated that net inflows were higher than pre-pandemic levels, and outstripping market gains. Fundscape, a research firm, predicts that the market will double to 658 billion pounds in 2026.
Freetrade, an independent online trading platform, claims that its assets have risen to 1.1 billion pounds from 240 million before the pandemic. Its most popular month for sign ups was October, with 115,000 members. This compares to 75,000 who joined in February during the peak of the meme stocks phenomenon, which was typified by the social media favorite Gamestop.
"Gamestop was a catalyst for sure, but it's not like that was the peak," Freetrade co-founder Viktor Nebehaj said.
"It's obvious to us that investment accounts are going to be as normal as bank accounts."
Although Britain is not as well-known for having-a-go investors than the United States, it is growing an active retail investor community.
Surveys by Forrester reveal that around 14% of British adults are interested in automated investment, which is slightly less than the 16% in the United States, but more than France (12%).
According to Calastone's survey, UK consumers saw the greatest increase in those who are likely to invest in the future at 58%, compared to 41% pre-pandemic.
Britain has a number of platforms that are rapidly growing, such as Hargreaves Lansdown(HRGV.L), Trading 212, and Moneyfarm.
Those who join are often younger and first-time investors.
According to Oliver Wyman's October survey, more than half of all new investors have less than two years experience. Freetrade reported that 55% of its new clients were first-time investors.
These platforms see more opportunities. Research by the Financial Conduct Authority has shown that 8.6 million British citizens have more than 10,000 pounds of cash deposits. This figure is something the regulator hopes to lower.
AJ Bell (AJBA.L) is one of the companies that are trying to reach this new group of investors. Dodl is the 26-year-old company that launched the commission-free investment app Dodl. Investors new to investing will be provided with guidance by furry "monster" characters.
The banks are also taking part. JPMorgan will offer investment opportunities to Chase customers next year via Nutmeg. Continue reading
Lloyds plans to almost double personal pension assets and investment assets to 100 billion pounds from 60 billion.
Experts worry that investors who have joined the bull market could be faced with a rude awakening.
A survey conducted by Britain Thinks this year found that only 41 percent of DIY investors thought losing their money was a real risk. Although the platforms claim they inform customers about potential risks, there are still concerns.
"There's been a lot of concern about the gamification of investing," said Ryan Skinner, principal analyst at Forrester. "In terms of the future of these platforms, a lot is going to be dependent on how regulators respond."