An increase in the number of active traders and consumers wanting more control over their investments led to more growth in the self-directed market in 2012.
According to a new report from Celent, the self-directed market, which mainly consists of online brokerages, grew by 5% last year. By 2014, active investors and active traders will make up 43% and 6% of the total U.S. self-directed market, respectively, the research and analysis firm said.
The Boston-based Celent also found that more women are opening self-directed accounts. While the active trader segment will remain male-dominated, by 2015, females will approach 12-15% of active trader accounts, the report noted.
Investors are also becoming more active going from trading less than three times a month to up to 10 trades a month.
In response to the increase in investors taking the self-directed route, a number of online trading firms have emerged that specialize in options and equities trading on one platform, the analysis showed. Other firms have released newly rebranded and enhanced active trader platforms.
Celent said that to differentiate themselves and capture a greater share of the investor’s wallet, online brokerages continue to enhance their trading functionalities, usability and analysis tools.
Over the past 18 months, there have been a number of mergers and acquisitions among firms looking to consolidate or improve their position in the active investor or active trader market, according to the report.
Celent also found that the larger online brokerages have been focusing extensively on retirement and managed account products. In the retirement space, they offer self-directed tools such as net worth analysis, asset allocation, planning calculators/tools and portfolio analysis/monitoring.
Firms are also emphasizing hybrid models of service in which investors can contact an adviser for a portfolio/asset allocation analysis, for investment recommendations, and to validate or analyze a retirement plan, the report noted. Where possible, brokers will cross-sell investors into managed account products.