The meteoric rise of the self-directed investor

3 minute read.

You didn’t hear it here first, but self-directed investing is a global phenomenon, and New Zealand has joined the movement. ANZ and ASB brokerage apps were among the first generation to get Kiwis interested in doing their own investing, paving the way for brilliant challengers like Simplicity, InvestNow, Sharesies, and now Hatch.

Think that’s it? Think again. Financial revolutions don’t just happen overnight, and more and more challengers are joining this space. We love to see new startups and existing financial institutions working together to make all Kiwis better off.

However, we digress.

Investors love the increased range of investment offerings available in New Zealand. Thanks to innovators, we’re finally servicing the needs of a new generation of investors who want to manage their investments. Just look to Australia for proof: Stake, SelfWealth, Stockspot, and Raiz all have their fair slice of the market. In the US, Robinhood has just jumped to 5 million users in under five years, eclipsing E*Trade’s 3.5 million. Even traditional banks such as JP Morgan Chase are responding by slashing fees and revamping technology to serve this new, engaged investor better.

We say it’s about time.

Self-directed investing: more than just a trend

You’ve heard about self-directed investing, but what is it exactly?

Well, it’s many things, but its primary definition is the act of investing shares, bonds, funds, and other securities on your own, and controlling your financial destiny. Don’t be fooled by the “self-directed” part of it: it doesn’t, in any way, imply you should cut your professional advisor. Trusted financial advisors and thought leaders still have a valuable place at the table.

As an investor yourself, an advisor or broker may be an existing part of your successful investing toolkit. Good on you. The more financial information and resources at your disposal, the better. Easy access to financial information and the technology to act on it has just given investors a choice to self-direct their money as well. It’s a brave, new investment world out there.

Everything at your fingertips

The Internet has completely changed the way we live our lives. For better or worse, every industry, and admittedly, technology has an impact on every aspect of our lives. When it comes to investing, it’s safe to say that technology has democratised wealth building and management. The digital generation makes purchase decisions based purely on peer recommendations and information from online research. Armed with this knowledge, they’re now able to invest in an investing world offering new solutions that deliver straightforward advice, thoughtfully built products (cough* like Hatch), and quick access to markets at their fingertips.

This is just the beginning

Democracy, digitalisation, or just being fed up with paying hefty fees. Whatever the reason digital consumers have for self-directing their money, it allows them to take control of their finances. In this revolutionary learn-by-doing way of growing wealth, investors finally have access to a world of financial information and tools and are no longer hindered by exorbitant fees or exclusive access.

Self-directed investors are bold – so bold in fact that they’re forcing the financial industry to rethink how it engages directly with consumers. In the last decade, we’ve seen a significant shift in power when it comes to finances. Fueled by new services, consumer trends, digital technology, and the idealism and disposable income of the mass affluent (that’s you), the power is now firmly in the hands of the people. Which is right where it should be and should’ve been all along.

The fintech movement feeds off progressive, future-focused leaders tired of being trapped by the existing frameworks of the finance industry. We’re excited to see how these trends grow and evolve over the coming years, and we’re excited to be at the heart of it here in New Zealand. What’s clear to us is that investors want greater control of their finances. That attitude isn’t likely to change anytime soon. If anything, they’re going to want even more control, better products, and access to the world.

We plan to be there for them, at every step of the way.

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