News | 20 April 2021

Insights from Boring Money’s report on the D2C investing market

Boring Money provides information, tips and best buy tools to savers and investors. Every year it releases the Online Investing Report to help providers understand the trends, investor attitudes, challenges and opportunities of the D2C landscape. We’ve crunched some key insights from the report and webinar – based on a three-month survey of more than 6500 UK adults- as the results were interesting.

It’s been a turbulent year for everyone, and it’s no surprise that COVID-19 and lockdown have had a considerable impact on the way people see their lives – and finances – unfolding from here on. But, while there has been a degree of ‘hunkering down’ over the past year, that doesn’t mean people aren’t looking to the future.  

Investments are up 

The number of UK adults with investments has actually grown by 2% over the pandemic and, although a whopping 42% of people are still steering clear of investing at all by holding cash savings only, 44% of those report that they’re considering putting some of that cash into some form of risk-based investment. That figure is up and, as Boring Money says, it’s an ‘open door’. That claim looks to be solid when you realise that, over the past three years, the number of people with investment accounts has increased by around 16%, pushing total AUA (the amount of investments administered by third parties) to an unprecedented £306bn, also a rise of about 16%.  

DIY investor profile is changing 

So, yes, there are more people investing (9% of the UK’s total number of investors only got going in the last 12 months) but the fact that the size of each customer’s investment is going down shows that individual DIY investor profiles do seem to be changing. It’s worth noting that the average age of these new investors is 34- but also that nearly two thirds are men. If, as Boring Money does, you perceive some of these small investments as ‘gambling rather than investing’, this may provide an insight into how providers need to approach this group.  

Robo accounts and shrinking ISAs 

In a further move away from the traditional landscape, robo accounts – which provide advice or investment management with minimal human intervention – now make up 19% of D2C accounts. The ISA picture is changing too – average account sizes are lower, with people switching to investments and moving away from platforms that have clearly been suffering with their operational capabilities – such as call-centre response times and customer service – over the pandemic.  

Increased savings for some 

Does this mean people are cutting out the middleman? There’s no doubt that people are more engaged and willing to do their own research in managing their portfolios, via best buy lists, X-ray tools for analysis, and information they can go and find for themselves. And, for some, the cash is there to do so – lower expenditure over the pandemic has led to an increase in savings – where others have had to use their cash just to survive.  

Lack of confidence  

With 60% of people thinking the UK economy is set to get worse over the coming year, investor confidence levels are low, particularly among women, 50% of whom score their confidence at below five out of 10. This lack of confidence means that for many the priority is more about maintaining financial stability, rather than enhancing it. This is also impacting on sustainable investing. Last year, one in four investors put sustainability ahead of profit in their priorities. Not now – this figure is down to 13 per cent, although this is probably a temporary shift due to current worries removing the focus from longer-term thinking. 

Mobile-first approach 

We saw earlier that 9% of all UK investors are new to the market – and quite young – and it’s striking how important mobile access is to them. Many of them are choosing brands that are strong on mobile because they specifically want to do their research and trading on mobile apps, even during lockdown when they could be using a laptop or home device. Ease of use is more important than ever. 

Cryptocurrencies and traditional banks 

This same demographic also seems to be leading the way on cryptocurrencies, which look to be here to stay. Cryptos are now owned by 6% of adults, and 40% of male investors aged 18 – 44 say they’d consider buying them. At the other end of the age spectrum, savers over 55 are still thinking far more traditionally, with 55% of this group preferring to invest via trusted institutions such as their bank, even when they could pick up better returns elsewhere. Brand loyalty is clearly still very powerful. 

Personal interaction gives a guiding hand 

So, what’s in store going forward, and how are investors and asset managers going to have to adapt to what is likely to be a volatile market for some time yet?  Some trends, such as robos and the necessity for provision of a good mobile experience, are looking unstoppable. On the other hand, the pendulum is likely to swing back towards sustainable investing as people start to reassess what ‘wealth’, in the broader sense, really means. Step up, good old customer service. It’s good to talk, and a return to closer personal interaction can only help people understand what matters to them and help them invest accordingly.  

Author
Jasmin Gerrard,
Strategy & Insights Manager