The self-directed investing market is growing rapidly and their returns are beating financial advisers

March 8, 2017 | Rocco Savage

As the technology gap narrows between institutional and retail, investors are deciding to take their financial future in to their own hands. Today there are 54 million self directed investors, increasing 4.9% annually compared to non self-directed at only 1.4%. Previous average returns for self-directed investors are at 17.1% vs. investors who use financial advisers at 14.1%.

Individual investing is becoming more and more prevalent. According to Aite Group, about a quarter of all U.S. adults with internet access are retail online traders, and an additional 6 percent are professionals, for a total U.S. individual trading population of 54 million.

A 2014 report from Cerulli Associates found that nearly 30 percent of high-net-worth investors in the United States define themselves as self-directed investors. According to a February 2015 Celent report, the self-directed segment of investors was growing faster than the non-self-directed segment, at 4.9 percent compared to 1.4 percent, so this trend is likely to continue.

The report estimated that, as of 2015, about 47 percent of investors were self-directed. In addition, the demographics of retail investors are expanding to include groups like baby boomers, millennials, retirees and women.

Because of these changes, bank brokerages are now offering more services aimed at assisting individual investors. For example, some firms offer hybrid investing services that support both self-directed investors and those who want professional guidance. Also, firms are offering more free educational information so self-directed investors can be well informed.

These added services seem to be helping, as self-directed investors tend to see quite a bit of success, even outperforming investors with financial advisers in many cases. According to SigFig, a website that helps investors manage their money, investors who were clients of financial advisers had returns of 14.1 percent in their portfolios in 2013, while self-directed investors saw 17.1 percent returns.

The Self-Directed Market:


Read the entire article at: More Investors Striking Out On Their Own. What Does All This Self-Directed Trading Mean?


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