Direct-to-investor assets double since '08

By BenefitsPro


By Paula Aven Gladych

Direct-to-investor assets have nearly doubled since 2008, outpacing the growth of traditional advisory models used by large wirehouses, according to research from Boston-based Cerulli Associates.

The largest growth in the direct-to-investor model has been through trading platforms, like Charles Schwab and E*Trade, which have growth to about $4.3 trillion out of $26.6 trillion of total investable retail assets.

Traditional wirehouses, in contrast, hold about $5.2 trillion of investable assets.

Within direct channels, the firm is responsible for the majority of investor-level marketing, prospect generation and advice generation. In traditional advisory firms, individual advisors bear these responsibilities, Cerulli found. Even though a client of a direct firm may have a relationship with an individual advisor, the investment and financial planning advice delivered by the representative is typically generated by a centralized team rather than by a single advisor.

Cerulli anticipates an ongoing migration of investor assets away from wirehouses toward more independent advisory channels and direct distribution models, in part because investors are still wary of the financial markets following the economic crisis that occurred in 2008. The growth of consumer technology has eliminated many of the hurdles that had previously limited growth of smaller practices, which is also fueling the growth in this market, Cerulli found.

Originally published on BenefitsPro.com