The self-directed market has been attracting increasing concern but should advisers really be worried? On this week’s Wealth Professional TV we speak to OneVue’s Connie McKeage who believes DIY investors should be seen as holding exciting opportunities instead of as a threat.
Video transcript below:
Anna Temple, Wealth Professional Online
Anna Temple: Concern around DIY investors has been growing, but should advisors really be worried? Connie McKeage of Onevue believes not. She says that DIY investors are not a new threat, rather an opportunity for the industry to educate the public about the value of advice.
Connie McKeage, CEO, Onevue Limited
Connie McKeage: The reality is about 20% of the market is advised, as we stand here today and 80% isn’t. So, it’s not like it’s a new threat, it’s just that it’s been a hidden threat to them historically. We see it as a tremendous opportunity, so much so we are investing heavily in what we call a digital vertical. And that’s not just about social media and things like that. It’s really about finding questions to educate.
Anna Temple: Mckeage believes industry has been too pre-occupied concentrating on short term PDs from funds under management, rather than thinking about the long term rewards to be reaped from educating the public.
Connie McKeage: I think one of the failings of the industry has had today, has really been the focus on transactions because both the brokerage community and the investment management community broadly make its money by funds under management or the number of transactions. It’s really required a major mind shift to understand that there is a case of now between what investors want and what we are providing as part of the industry’s solution, which is it now means an investment in education. The reality is that most consumers will transact once you have built loyalty around the education, once they understand what they are doing and that’s an investment all the time. So, I think as an organisation as well as this sector, it’s quite important now that we make that mind shift, but it’s going to take a little bit longer for the majority of self directed consumers to start transacting with us which means that we will make the money inevitably but not you know perhaps in the period of time that we would have via advisory networks etc. and that’s really an opportunity for this sector as well.
Anna Temple: McKeoge cites the self managed super fund market as a good example of an area where improvements in consumer education could be made.
Connie McKeage: Let’s take a self managed super fund as an example. Right now the X and Y generation is setting up self managed super funds at a faster rate than the war generation and the baby boomers. We can understand that because they are the, you know fresh blood coming into the market. What does that mean though? It means that they would gravitate towards things that they know. Listed securities and managed funds, but there is this [plethora] of other opportunities in a self managed super fund, like property [giving] into it, warrants, collectibles and they are not really cribbing to that kind of information. If we educate them, through questioning and education, we can all open up a world where they understand the value of advice and post FOFA it’s all about the value of advice.
Anna Temple: This is Anna Temple reporting for Wealth Professional Online.