Rise of online brokerages a trend to watch, says Broadridge

investmentnews.com:

Contrary to popular belief, the market for self-directed investing isn’t all about the young and not-yet-rich, according to a new study from Broadridge.

The landmark study, which analyzed the activities of over 40 million individual investors in mutual funds, exchange-traded funds, and equities, showed a broad-based shift towards self-directed investing spanning different demographic and wealth groups.

The analysis revealed a marked increase in self-directed investing since 2018, with 31 percent of investors in 2023 using online discount brokerage platforms, including one-third that maintain advisory relationships. The trend is more pronounced among high-net-worth individuals, who allocate nearly 25 percent of their assets to self-directed channels, compared to their mass market and mass affluent counterparts.

Generational differences are also evident in the study. Younger investors, including Gen-Z, millennials, and Gen X, have significantly increased their presence in self-directed investing. These groups collectively hold 36 percent of their assets in this channel, up from 27 percent in 2018.

“The rise of younger investors and self-directed investing has led to asset managers, broker-dealers and advisors evolving their practices to better serve a more diverse class of investors across generations,” Dan Cwenar, head of Broadridge data and analytics said in a statement.

The study also pointed to a possible increase in diversification among Gen Y investors, with the average number of investments in their portfolios rising from six in 2018 to ten in 2023.

2023 also marked a pivotal year as mutual fund assets fell below equity assets in individual portfolios for the first time. In parallel with that, the percentage of