Asset managers have been warned not to ignore the customers of low-cost, direct-to-consumer fund platforms.
These customers, who are typically young and tech-savvy, are the high-net-worth investors of the future, says Angelos Gousios, senior analyst at Cerulli Associates, which has researched the market.
And these investors are not the only ones using the cheap online platforms. The research found that the platforms also have clients who invest more than £1 million (€1.3 million).
“It is risky to assume that the clients of smaller direct-to-consumer platforms are those who cannot afford advice,” says Barbara Wall, Europe research director. “Higher-net-worth investors also told us that they are reluctant to pay advisory fees.”
A survey by Cerulli Associates found 59% of asset managers in the UK have a strategy for selling directly to consumers or to platforms. The proportion in other European markets was significantly lower.
The research firm also found that inflows to investment funds from direct-to-consumer channels are rising fast, aided by technological developments and regulatory changes that have forced fund providers to be more transparent about advisory fees.
Many online platforms have low-cost passive investment funds such as trackers and exchange-traded funds (ETFs) at their core, presenting a challenge to higher-fee, actively managed funds.
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