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Direct-to-investor assets nearly doubled since 2008

As direct providers add services, the distinctions between the direct and advisory channels may be unclear to the average investor, Cerulli Associates says

October 28, 2013 11:24 IST | India Infoline News Service
According to new research from Cerulli Associates, a Boston-based global analytics firm, direct-to-investor assets have nearly doubled since 2008 and the growth has outpaced advisor-intermediated investing.

"We've seen tremendous growth in direct-to-investor distribution models, predominantly discount trading platforms that are transforming into comprehensive advice providers," comments Roger Stamper, senior analyst at Cerulli.

"Formerly considered the tool for do-it-yourself investors, these firms now provide a suite of services to investors across wealth and service tiers, providing legitimate competition to their traditional advisory peers."

Cerulli's Retail Investor Product Use 2013: Impact of Change in Investor Risk Appetite report is designed to help product manufacturers and distributors understand retail investors' product preferences, product use, and product needs to better inform development and distribution initiatives.

"As direct providers add services, the distinctions between the direct and advisory channels may be unclear to the average investor," Stamper explains. According to Cerulli, the fundamental differences between advisory and direct channels are that, within direct channels, the firm is responsible for the majority of investor-level marketing and prospect generation as well as advice generation, whereas in traditional advisory firms, individuals advisors bear these responsibilities.

Even though a client of a direct firm may have a relationship with an individual advisor, the investment and financial planning advice delivered by the representative is typically generated by a centralized team rather than by the advisor themselves.

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