Online brokerage firms have doubled their assets since 2008 by targeting Gen X/Y investors, according to a recently released report by Corporate Insight and Cerulli. The study was reported in InvestmentNews here. Add to the mix more than 130 online advice start-ups launched since the Great Recession and there is evidence that more younger, mass affluent will eschew face to face meetings and use online advisors.
Of the $27 trillion in retail assets, $4.3 trillion was gathered by online brokerages — nearly double the amount they held in 2008. Traditional advisors account for $15.4 trillion of the total, of which wire houses account for $5.2 trillion. Gen X/Y investors are more comfortable using online services for sensitive buying decisions than are Baby Boomers. They also lack trust in big-brand financial institutions, which they perceive to have more complicated and obfuscated fee structures.
According to the report, while not all of the 130 start-ups will succeed, more mass affluent investors who just need basic financial planning will probably use the Internet to create and implement their investment strategies. Advisors will need to customize their solutions to compete, says Michael Kitces.
