Emerging from the financial crisis of 2008 and 2009 is an interesting trend – self directing your investment plan is gaining traction! More often than not investors find comfort in turbulent times by hiring a professional financial advisor. Not as much now however, as prior to the 2008 melt-down.
Some reports estimate that online brokerage accounts gained as much as 3% of market share between 2008 and 2010. Wirehouse brokerage firms lost roughly 1.1% over the same time period and many retail brokerages lost 4% market share.
I suspect a large rise in the ranks of independent registered investment advisors who manage their client’s investment assets at discount brokerage firms has a lot to do with the 3% increase in assets however. The study did not distinguish the difference between self-direct investors and those hiring a professional RIA.
According to Cerulli Associates Inc. online brokerage custodians such as Charles Schwab, TD Ameritrade, Vanguard and Fidelity garnered 3.7 trillion in total assets between 2008 and 2010. This represents a 19% annual growth rate versus 14% for other financial advisor channels. It’s expected the online brokerage model will reach 5 trillion by the end of 2014.
As investors continue to move away from commission based wirehouse and retail financial advisor models they move towards online discount brokerages. The real question is this move good for the average investor?
At Portfolio Architect we believe it can be GREAT for investors! But not without some expert financial guidance and support. We see the trends, we know investors want more control, greater flexibility with investing and access to the best mutual funds and ETF investments. With the Portfolio Architect model investors get all of this AND still have the professional guidance and expert advice of a CERTIFIED FINANCIAL PLANNER(TM) and Accredited Investment Fiduciary®.