Overview
Catalyst
Summary
Sizing the Global Market for Self-Directed Investment
Defining the self-directed investment market
Globally execution-only mandates constitute .% of total HNW assets
HNW clients in Central and Eastern Europe have the strongest inclination to use execution-only services
Among developed markets, execution-only platforms are popular particularly in France
Over a quarter of global HNW wealth is invested independently of wealth managers
Users of execution-only mandates are also likely to self-direct through third-party services
The HNW self-directed market is largest in the US and China
Demand for execution-only services will grow, but will be outstripped by advised services
Prior to MIFID coming into force, minimal change is forecast in the European self-directed market
Mass affluent investors use advice less frequently than HNW individuals
The mass affluent self-directed market represents an opportunity for wealth managers
Drivers for Self-Directed Investment
Demographics are essential to understanding the self-directed market
First-generation entrepreneurs are likely to invest independently
Younger investors also show a tendency to self-direct
Wealth managers should consider long-term demographic trends
Drivers for self-directed investment differ between developed and developing economies
Price sensitivity is more prevalent in developed markets, but is not the only driver
The desire to maintain control and financial sophistication trump price concerns in Australia and the UK
Digital solutions have boosted the execution-only market in Asia Pacific
Drivers for mass affluent self-investment differ from HNW segment
The UK: The lower the value of investments, the greater the price sensitivity
Understanding the Competitive Landscape
Execution-only asset management services are available through the majority of HNW-focused wealth managers
Wealth managers’ execution-only platforms have been exclusive to HNW clients
Universal banks typically operate execution-only platforms for a wide spectrum of clients
Charles Stanley serves self-directed clients regardless of their affluence level
HNW-focused competitors can benefit from opening their execution-only platforms to the wider market
Brokers are typically a mass affluent proposition
Brokerages have low investment thresholds
Some competitors differentiate offerings for wealthier clients
Fidelity graduates its products and services based on the level of wealth
In the US, brokerages offer a competitive fee structure for price-sensitive clients
Product Environment in the Self-Directed Market
Self-directed investors tend to have deposit heavy portfolios
Assets held in deposits can be easily transferred to more sophisticated products
Self-directed investors contribute to the growth of ETF assets
ETFs appeal to price-sensitive clients
Wealth managers can leverage ETFs in advisory or discretionary mandates too
Some markets still lack easy access to the ETP market
Conclusions
Wealth managers should choose the products available via their execution-only services carefully
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