DIY investors trying their hand at managing their own funds and pensions are cutting professional financial advisers out of the market, according to a new survey.
New financial rules imposed across the UK and Europe and more online trading platforms are opening the investment market to self-traders, IFAs complained to financial firm Legal & General.
Nearly all IFAs (95%) believe their clients are looking at DIY investing, says the research.
Ahead of the implementation of the Retail Distribution Review in January 2013, the research also found that over half (53%) of IFAs believe there will be a rise in the number of DIY investors in the market because of the new legislation.
Of those IFAs who expect an increase in DIY investing, 61% believe we will see more providers launch direct-to-customer products, while almost one in five (17%) believe that consumers are likely to become more investment savvy.
Fewer IFAs thought that an increase in DIY investors would lead to consumers ending up with unsuitable investments. This fell from 79% in 2011 to 68% in 2012.
Simon Ellis, Managing Director, Legal & General Investments, said: “In the current climate and with the imminent implementation of RDR, it is no surprise that many IFAs believe their clients are already trying their hand at DIY investing.
“Investing without an appropriate level of knowledge or support could mean a rise in unsuitable investments. However, it is interesting to see that some IFAs think DIY investors are savvier now than last year.
“It would be naïve for advisers or providers to assume that access to information and decision support via the internet will not encourage more consumers to make their own investment choices. The challenge will be to show the value of advice over data gathering and cheap execution, or to become a player in this non-advised marketplace.”
