Advisory firms have yet to crack the code on the hybrid solution that self-directed investors want, finds a J.D. Power study on Canadian self-directed investor satisfaction. The study found clients want tailored advice combined with self-service tools and resources. 

“With about half of investors whose primary account is self-directed—indicating a current or imminent need for full-service advice—self-service brokerages have significant assets at risk of attrition if they are not able to meet this need,” says Mike Foy, senior director of the Wealth Management Practice at J.D. Power.

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Further, 60% of millennials (defined as people born between 1982 and 1994) either already have a secondary full-service account or plan to open one in the next 12 months. Millennials, adds Foy, are “looking for self-service-with-benefits models that allows them to manage their accounts but also receive advice from professionals when they need it. Firms that can get that balance right—and offer it at a competitive price—have a huge opportunity to fulfill an unmet need.”

Robo-advisor adoption modest

Overall, robo-advisor usage among self-directed investors has declined in 2017 to just 19%, down from 24% in 2016, finds the study. Despite that low utilization rate, however, 55% of millennials and 48% of older investors (defined as people born before 1982) rate their robo-advisor as high as or higher than their primary self-directed provider. This suggests that as awareness and adoption increase, robo options are well positioned to fill the unmet need for guidance, says the study.

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Mobile trading continues to gain share

The study also finds that mobile now accounts for 63% of overall trades (among people who use mobile at all for trading), up from 48% in 2015. This makes it the primary trading channel for self-directed investors. Firms that are able to shift other investor interactions, like reviewing performance and doing research, to mobile enjoy higher levels of satisfaction, according to the study.

About the survey: 2,609 investors who primarily invest with self-directed investment platform providers in Canada were surveyed. The study was fielded in May 2017 through June 2017.

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