Why a Rise in Self-Directed Investing Is Good for Advisors

The do-it-yourself scene isn’t just for arts and crafts or home renovations anymore. 

Nearly one in three investors used self-directed, online brokerage platforms last year, and that’s up from just over one in five in 2019, according to a new study from Broadridge. The research found that advisors still court the bulk of investors, but their market penetration has fallen from 88% to 79% in the same time. That may sound like bad news for advisors, but the changes have less to do with assets moving out-of-house, and more about investors’ growing wealth and enthusiasm for playing the markets. 

“The pie continues to grow, so the share of assets is getting bigger,” said Andrew Guillette, vice president of global insights at Broadridge. “Advice still reigns, and these aren’t worrisome trends.”

Myth Busting

While self-directed accounts gained plenty of popularity with the mass market and first-time investors during the pandemic, they’re not just a young person’s game. Across all income tiers and age groups — from your average Millennials to Boomer millionaires — investors are allocating funds to online brokerages. Advisors are actually encouraging their clients to have self-directed accounts that let them tap into alternatives, such as private real estate, equity, and credit. 

“We’re big fans of self-directed IRAs for the right clients,” said Scott Bishop, co-founder of Presidio Wealth Partners. The key is to educate clients, so they avoid pitfalls like Unrelated Business Income Tax, which can sneak up on clients when they get involved with alternatives. “Done right, it’s a win-win,” he told Advisor Upside.

America’s Pastime. If they had to choose, the majority of investors with both an advisor and a self-directed account said they could envision their advisor managing all their assets, Guillette said. So why even bother with online brokerages? “The main reason is they just really enjoy it,” he said, with 45% of investors citing enjoyment as their top answer. Diversification, low-cost trades, and room to “play” with riskier investments were also top responses. The Broadridge data found:

• From 2019 to 2024, investors with $5 million or more in liquid assets increased their proportion of investments in self-directed accounts to 24.5%, up from just 15.5%. 
• The median age of a self-directed account owner is 53, only a few years younger than the average client of an advisor at 57 years old.

“These investors are savvy, smart, and engaged, and they want relationships in both camps,” Guillette told Advisor Upside.