Carolyn Cohn and Iain Withers

LONDON, (Reuters) – The rise in DIY investment since the outbreak of the pandemic has caused banks and traditional asset managers to scramble to purchase or create online platforms to give investors more control over their investments.

Although the “meme stock” frenzy which saw consumers buying shares in companies mentioned on Gamestop has subsided, people still want to make their own investment choices or create wealth products.

Interactive investor was purchased by abrdn for 1.5 billion pounds (US$1.98 billion). JPMorgan (NYSE®:) earlier in the year bought wealth platforms Nutmeg, Embark and Lloyds (LON®:) respectively to offer more user-friendly digital products.

“If you refuse to move as an incumbent you will be in serious trouble.” There is no doubt,” Antonio Lorenzo (head of insurance wealth and insurance at Lloyds) told Reuters.

Data from research company Platforum shows that platforms offering direct investment tools to consumers is the fastest-growing sector of the consumer investor industry.

The assets under administration on these platforms increased 40% to 289Billion pounds over the past year, representing a third the total consumer market.

Reuters couldn’t find more industry-wide data. However, some top industry players stated that net inflows remained higher than pre-pandemic and outpaced market gains. Fundscape, a research firm, predicts that the market will double to 658 billion dollars by 2026.

Freetrade, an independent online trading platform claims that its assets have risen to 1.1 Billion pounds from the 240 million it had before the pandemic. The best month to sign up was October, with 115,000 members. This compares to 75,000 who joined in February during the peak of meme stocks, which is typified social media favorite Gamestop.

Viktor Nebehaj, Freetrade founder and co-founder said that Gamestop “was a catalyst but not the peak.”

We are certain that bank accounts will be just as common as investment accounts.

NEW GENERATION OF INVESTORS

Although Britain is not as well-known for having-a-go investors than the United States of America, it has a growing retail investor community.

According to Forrester surveys, around 14% are interested automating investing in Britain, which is behind the U.S (16%) and ahead of France (12%).

A survey conducted by Calastone, fund network, found that UK consumers experienced the largest increase of people who plan to invest in the future. This was 58% versus 41% pre-pandemic.

Britain has a number of platforms that are growing quickly, such as Hargreaves Lansdown (LON) – Trading 212, 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 2 years experience. Freetrade stated that more than 55% were new investors.

Further opportunities are being identified by the platforms. According to research from the Financial Conduct Authority, 8.6 million British citizens have at least 10,000 pounds of cash in their bank accounts. That figure, which regulators want to decrease, was revealed by Financial Conduct Authority.

SCRAMBLE

AJ Bell is one of the many firms trying to attract this new group of investors. Dodl will offer a commission-free way to invest. Its 26-year-old founder offers guidance and support from “monster furry” characters for those who are new to the investment game.

The banks are following suit. JPMorgan intends to provide investments for customers of Chase, its British branch next year via Nutmeg.

Lloyds wants 100 billion pounds in assets for personal pensions, investments. This is nearly twice the amount of 60 billion.

Experts worry that new investors might be confronted with rude awakenings if the bull market is over.

According to a poll by Britain Thinks, only 41% of DIY investors believe that losing the money they have invested is a real risk. While the platforms state that they have educated customers about possible risks, concerns still remain.

Ryan Skinner (principal analyst, Forrester) stated that there has been concern over the “gamification” of investing. How regulators react will determine the fate of these platforms in the long-term.

($1 = 0.7548 pounds)