The retail direct channel continues to gain market share, posing a challenge to advisor-intermediated channels as the needs and preferences of the end-investor shift, according to new research from Cerulli Associates.
Cerulli found that retail direct investor platforms grew by 22.2% from 2022 to 2023, or $2.5 trillion of asset growth, faster than all other distribution channels over that period. Several factors account for this growth, including increasing numbers of self-directed retail investors and direct firms’ success in retaining 401(k) assets in individual retirement accounts.
Retail direct market share grew by 5 percentage points over the eight years trailing 2023. Cerulli expects the channel to grow another 5 points over the next four years and possibly experience a 10-point increase from 2016 to 2027.
At the same time, wirehouses have lost 4 percentage points of market share since 2016 and are expected to lose another 4 points by the end of 2027.
“The retail direct channel presents a consistent threat to advisor-intermediated channels as end-investors are increasingly educated and have access to high-quality investment products at lower costs than ever seen before,” Matt Apkarian, associate director of product development at Cerulli, said in a statement.
Professionally managed assets finished 2023 with about $65.7 trillion, up 9.4% from year-end 2022, although below the all-time high of $67.8 trillion reached at year-end 2021.
