The meteoric rise of the self-directed investor

5 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, Smartshares, 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.

But we digress.

This is what we know: investors are loving 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 own investments. Just look to Australia for proof: Stake, SelfWealth, Stockspot, and Raiz all have their fair slice of the market, and new challengers will undoubtedly join them. In the US, Robinhood has just jumped to 5 million users in under 5 years, eclipsing E*Trade’s 3.5 million. Revolut, with its fingers in an increasing number of pies, is launching a commission-free share trading platform, allowing anyone to invest in listed companies without the steep fees. Even traditional banks such as JP Morgan Chase are responding by slashing fees and revamping technology to better service this new, engaged investor.

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 a lot of things, but its main definition is the act of investing shares, bonds, funds, and other securities on your own, and controlling your own 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 the choice to self-direct their money as well.

Self-directed investors are looking at interesting alternatives to the options that have traditionally been available.  Like peer-to-peer lending. Yeah, you’ve heard of it, you may have even dabbled in it. Homegrown P2P platform Harmoney is popular here, and they’re also giving Australian rivals SocietyOne and Ratesetter a run for their money. P2P lending has benefits for people on both sides of the loaning process. Borrowers get access to loans with lower interest rates and fees, while investors benefit through higher investment returns. Win-win.

Fancy venture capital? You’re covered. Equity crowdfunding platforms such as Equitise, PledgeMe, and Snowball Effect make equity investing accessible. Through these platforms, anyone can invest in startup businesses that have exciting growth potential.

That’s just a start. There are so many avenues for self-directed investors to experiment with. It’s a brave, new investment world, and we love exploring every part of it.

Everything at your fingertips

The Internet has completely changed the way we live our lives. For better or worse, every industry, and admittedly, every aspect of our lives has been impacted by technology. When it comes to finance, it’s safe to say that technology has made money management more democratic. The digital generation is used to making purchase decisions based purely on peer recommendations and information from online research. Armed with this knowledge, they’re now able to invest into a financial world offering new solutions that deliver easy advice, thoughtfully built products (cough* like Hatch), and quick access to markets.

This isn’t just about technological convenience, but rather empowerment. Self-directed investing is much easier when you have constant and instant access to your portfolio. You can monitor your portfolio any time, anywhere, reacting to market developments as needed. Mobile investing apps can offer all the bells and whistles found in desktop platforms, including automatic trading tools. You can also hunt down information like financial reports, quickly and easily. This is democracy at its best, and we’re proud to be a part of it.

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 gives them the opportunity 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.

Armed with technology, 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-focussed 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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