A consensus view from 17 CEOs and Directors of non-advised investment platforms is that we’ll see over £100 billion added to the coffers over the next 5 years. Sounds feasible. But where is this coming from?
As part of our Digital Wealth Report we surveyed the CEOs and Directors of 17 leading DIY investing platforms and robos. They suggest that today’s DIY investing market will grow by over £100 billion over the next 5 years to top £315bn. Those with skin in the game believe that compound annual growth rates seen to date are broadly sustainable.
Our survey identified that:
37% of CEOs and Directors predict assets will reach over £315bn over the next 5 years
A further 36% of CEOs and Directors forecast more modest asset growth of £252bn-£314bn
Just 6% anticipate growth of 0%-19%
Us? Well we think a figure of £385 billion is realistic. Trouble is that this has largely been a game of Polly Put the Kettle On to date. Polly put one on and Suky took one off – money from the same hobbyist investors swirls around the system whilst the cash savers stick solidly in cash.
To grow, we need to really crack this engagement conundrum, to take the cash challenge and to continue to work with the new investors brought into the field by auto enrolment.
Although significant growth is anticipated, today’s uptake of robo advice Mark One remains small. There was £2.3bn managed by UK robo advisors as at Q1 2018. To put this into perspective, Nutmeg has around half of this market today. And these robo clients are typically male, affluent and savvy. Not the millennial shrinking investment violets of urban myth.
Although robo advisers retain a tiny market share today, we think that Robo Mark 2 has the potential to accelerate growth. The focus will shift from the provision of online decision trees leading consumers to a pre-packaged portfolio, and move more towards advice.
If the banks and life companies can crack this space, this will also fuel growth. But that’s a big ‘If’. They are typically slow and hamstrung by committee-think so this needs to be a story of specialist partnerships and collaboration rather than a solitary offense as in the past.