Do-it-yourself (DIY) investors are taking charge of their own investing activity largely because they prefer the hands-on approach, and not necessarily because they don’t trust financial advisors, according to the British Columbia Securities Commission (BCSC).
The BCSC published a report which detailed the emergence of DIY investing, and sought to document some of the differences between investors who do and don’t work with advisors.
Approximately a third of DIY investors said having control over their investments was their primary reason for going the DIY route. Others suggested cost, convenience and a preference for being responsible for their own losses were key reasons.
“While many investors still seek traditional advisory services, a notable number of Canadians are drawn to DIY investing for its autonomy, potential cost savings and the pursuit of financial knowledge,” said Pamela McDonald, director of communications & education with the BCSC, in a release.
Among all investors surveyed, the top source of information for making decisions about money was advisors/financial professionals, with 25% of respondents saying so unprompted. When respondents were given a list of information sources, their top responses were their bank or credit union (48%) and an investment advisor/financial planner (37%).
DIY investors had slightly different investing goals than their advised counterparts.
While most investors (77%) point to long-term/retirement savings as a key goal, the research found DIY investors were more likely to also cite other objectives, including generating income, the possibility of earning large returns and “having fun.”
There were also notable differences between DIY and other investors concerning social media. Self-directed investors were more likely to use information from social media and put more trust into information that originates on such platforms.
The top source of financial information information online generally was YouTube, followed by Reddit and X. Among investors aged 18 to 24, however, the top source was TikTok.
In turn, DIY investors were less trusting of institutions such as government and traditional media in general. But this skepticism didn’t necessarily extend to financial advisors.
“In the focus groups, distrust of financial professionals was not especially salient; most DIYers just like to invest by themselves,” the report said. “[M]ost reiterated the things that were appealing about DIY in the first place — control, convenience, options, fees, and enjoyment — as reasons they would not use an advisor.”
Some DIY investors indicated they would be open to using an advisor “because they believe they offer safety, knowledge and ease.” Other said they’d switch if they had more assets to manage.
“As we navigate an evolving investment landscape, understanding investors’ motivations will help us, as regulators, provide the resources and protections they need,” McDonald said.
The BCSC report was based on a national survey carried out in March by Innovative Research Group with 4,272 adults, including more than 1,500 DIY investors.