26th June 2013
Discount broker Willis Owen says the number of do-it-yourself investors has surged due to changes in the way that independent financial advisers must now charge for their services.
Previously advisers were able to take a commission when they sold you a pension or mutual fund, but commission been banned on these products since the turn of the year (though not on insurance products).
That, Willis Owen says, has led to a huge surge in demand for its services, doubling the number of customers so far in 2013 compared to the same time last year. However it also suggests that the profile of these investors may be different and has launched a free online tool to help them make better informed decision called Your Space. (You do have to register). Here is what it offers –
A weekly value and holdings update, allowing users to see how their mix of funds is spread across the various IMA sectors and how much they have invested with each fund manager
• A ‘Portfolio Scan’ to reviewing investment performance
• Viewing portfolios both by provider and product type.
• Access to new research, valuations, performance charts
• Fund Fact Sheets and Interactive Charting Tools specific to individual portfolios
Jason Chapman, managing director at Willis Owen, says: “The investment landscape is changing dramatically post-RDR, with many more weighing up the DIY route. The problem is that many won’t have selected their own funds and constructed their own portfolios like this before – and the prospect of going it alone will be pretty daunting.
“This tool will be a fantastic aid to filling the information gap. Building your own portfolio requires research and time, but we also want customers to make decisions that support them over the long-term rather than just the next few months. By allowing users to track fund performances over time, we are arming them with the information they need to make informed choices.
“Picking the right funds, knowing how they perform over time, understanding your risk/reward balance – these are all important considerations for people when planning their financial future. Your Space will allow us to better understand what our customers prioritise the most, which aspects of their portfolio they are most keen to view and monitor, and the ways in which they prefer to do so. This will help us ensure we provide the service our customers want from us.”
Mindful Money view:
We don’t doubt the need for services and information of this sort though there are many such services and planning tools available. However, we also question where these new customers are coming from. If they are the ‘orphan’ clients of fully fledged independent financial advisers – who simply don’t want to pay under the new system, then they should be arriving with some knowledge about investment. However, our instinct is that most fully advised clients will be sticking with their financial advisers if they can.
We think many of these new do-it-yourself investors may have be orphaned by the banks. Our understanding is that most banks did not spend much time explaining the basics of investing such as the benefits of diversification and even basic financial planning though they were meant to. These investors may be arriving with a collection of funds that may bear little relation to their needs and risk profile. They could very easily be over-concentrated in a particular asset class. While portfolio tools should help with the latter, we are not sure they can help investors who are not all that well informed graduate to fully fledged self directed investors. It is worth looking around the full range of information offer. In fact a new site, Guidetoadvice.co.uk has launched with the aim of rating the sources of consumer information that could help an investor get up to speed.
But it may even be worth paying a decent adviser to talk you through some of these issues especially if they will give your existing investments a health check. You can also link to unbiased Findanadviser service.