As online brokerage firms navigate past the era of consolidation and move deeper into no-fee trading, a new study shows that many are finding it challenging to distinguish their services and deliver tangible value to do-it-yourself investors.
According to the J.D. Power 2024 U.S. Self-Directed Investor Satisfaction Study, satisfaction levels among DIY investors have stalled despite strong growth in the stock market.
Beyond that, players in the space are wrestling with how to differentiate and show their value to users, raising questions about what should come after the long-drawn game of chicken on fees in the DIY industry.
According to Craig Martin, executive managing director and head of wealth and lending intelligence at J.D. Power, retail brokerages have to reconsider their place in clients’ lives and "deliver clear, quantifiable value, particularly to younger investors.
"The one area where we are seeing increased demand across all categories of investors — even those historically characterized as strictly DIY — is for some level of personalized guidance and support,” Martin said, noting a void in personal connection at many firms.
The study showed a minimal increase in satisfaction among DIY investors, registering a score of 708 on a 1,000-point scale, up just slightly from the previous year. That suggests the “halo effect” of bullish markets on self-directed platform users is no longer in play, J.D. Power said.
Moreover, the study highlighted a concerning trend among buy-and-hold investors, who displayed the lowest satisfaction rates. Given their reluctance to adapt and seize on opportunities from market recoveries or rising interest rates, the research firm says firms catering to that group could be at risk of a collapse in customer retention.
But there could still be hope for online brokerages, as the research also pointed to a growing significance of personalized guidance. Satisfaction scores for investors seeking advisory services improved by 15 points in 2024, underscoring the essential role of tailored advice in boosting overall investor satisfaction.
"Trust is going to be a key variable for brokerage firms as they fight to attract growing ranks of millennial and Gen Z do-it-yourself investors,” added Kapil Vora, senior director of wealth intelligence at J.D. Power, noting that trust levels in online brokerage firms are at a plateau.
“[U]ntil firms find ways to better connect with investors, they are going to struggle to forge the strong relationships they need to differentiate and add value beyond just digital prowess,” Vora said.
"Im glad to see that from a regulatory perspective, we're going to get the ability to show we're responsible [...] we'll have a little bit more freedom to innovate," Farther co-founder Brad Genser told InvestmentNews.
Former advisor Isaiah Williams allegedly used the stolen funds from ex-Dolphins defensive safety Reshad Jones for numerous personal expenses, according to police and court records.
Taking a systematic approach to three key practice areas can help advisors gain confidence, get back time, and increase their opportunities.
Meanwhile, Osaic lures a high-net-worth advisor from Commonwealth in the Pacific Northwest.
The deals, which include its first stake in Ohio, push the national women-led firm up to $47 billion in assets.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
