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By Iain Withers and Carolyn Cohn
LONDON, Dec 16 (Reuters) - The explosion in DIY investing
since the start of the pandemic has led to a scramble among
Britain's more traditional asset managers and banks to buy or
build online platforms that give consumers more direct control
of their investment portfolios.
While the 'meme stock' frenzy that saw a rush by consumers
to buy shares in companies talked up on social media such as
Gamestop has simmered down a notch https://www.reuters.com/markets/europe/meme-stocks-gamestop-amc-slump-multi-month-lows-2021-12-13,
there's still a growth in demand from people to pick their own
investments or tailored wealth products.
This month abrdn bought interactive investor for
1.5 billion pounds ($1.98 billion) while earlier this year banks
JPMorgan and Lloyds snapped up wealth platforms
Nutmeg and Embark respectively to bolt-on more customer-friendly
digital products.
"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.
Platforms offering investment tools directly to consumers
are the fastest growing part of the consumer investment
industry, according to data shared with Reuters by research firm
Platforum.
Assets under administration at these direct platforms jumped
40% to 289 billion pounds in the year to March, making up a
third of the consumer market.
Reuters was unable to obtain more recent industry-wide data,
but some of the industry's leading players said net inflows
remained above pre-pandemic levels and were outstripping market
gains. Research firm Fundscape forecasts the market will more
than double in size to 658 billion pounds by 2026.
Independent online platform Freetrade says its assets had
leapt to 1.1 billion pounds, from 240 million prior to the
pandemic. Its best month for sign-ups was October with 115,000
joiners, compared to 75,000 in February at the height of the
meme stocks phenomenon typified by social media favourite
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."
NEW GENERATION OF INVESTORS
Britain may not be as synonymous with have-a-go investors as
the United States, but it's growing a more lively retail
investor community.
Around 14% of adults in Britain are interested in automated
investing, behind the U.S. (16%) but ahead of France (12%),
surveys by Forrester show.
UK consumers posted the highest rise in the world of those
likely to invest in future, at 58% from 41% pre-pandemic,
according to a survey by fund network Calastone.
Britain sports a band of fast-growing platforms, including
Hargreaves Lansdown, Trading 212 and Moneyfarm.
Joiners are more likely to be younger or first-time
investors.
More than half of new investors - with less than two years
experience - are less than 35 years old, according to a survey
by Oliver Wyman in October. Freetrade said over 55% of its new
customers were first-time investors.
The platforms sense further opportunities. As many as 8.6
million people in Britain consistently have more than 10,000
pounds in cash deposits, research by the Financial Conduct
Authority shows, a figure the regulator wants to reduce https://www.fca.org.uk/publications/corporate-documents/consumer-investments-strategy.
SCRAMBLE
Among those maneuvering to appeal to this new cohort of
investors is AJ Bell. The 26-year-old firm is launching
commission-free investment app Dodl, with those new to investing
offered guidance from furry "monster" characters.
Banks are also weighing in. JPMorgan plans to offer
investments to customers of its fledgling British bank Chase
next year via Nutmeg.
Lloyds wants to nearly double assets in personal pensions
and investments to 100 billion pounds, from 60 billion today.
Experts are concerned though that the new band of investors
could face a rude awakening whenever the bull market ends.
Only two in five DIY investors (41%) thought losing money
they invested was a genuine risk, a survey by polling firm
Britain Thinks found this year. The platforms say they educate
customers on potential risks, but concerns remain.
"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."
($1 = 0.7548 pounds)
(Reporting by Iain Withers and Carolyn Cohn, Additional
reporting by Muvija M in Bengaluru
Editing by Raissa Kasolowsky)
