Active trading is growing among women.

The self-directed investor segment is growing at a 4.9% clip, compared with the 1.4% snail’s pace of the non-self-directed segment, and brokers’ services are responding to this shift by building out their offerings, according to a report released Monday by Celent.

The research, commissioned by technology provider Scivantage, focused on factors driving growth in self-directed and advisor-led market, and on developments in trading activity and brokerage technology among these investors.

“The wealth management industry has undergone significant operational shifts as a result of changes in financial regulations and the increased role of technology,” Celent’s research director, Isabella Fonseca, said in a statement.

“In response to these broader industry trends, retail investors expect a more streamlined, hands-on trading experience, which has led to an increase in the self-directed population of traders.”

Key Findings

Regulations, client expectations and technology are driving change across the wealth management and online brokerage industries, the report said.

Now, clients want transparency, competitive pricing and quality client-centric service.

The report said a general sense of recovery and growth pervaded the market and brokerage firms. Customer daily average revenue trades and the number of customer brokerage accounts have grown steadily.

Mobile trading DARTs have been increasing since 2012, with 13% of all trades placed on a mobile device in 2014.

The U.S. online brokerage market is highly fragmented, according to the research, with the number of trading platforms having expanded and new firms having entered the market.

The average profile of the retail investor is expanding to include retirees, millennials and baby boomers.

This new demographic is prompting firms to offer more free, in-depth educational programs and resources to better inform investors of the trading process.

Researchers predicted that the active trader segment would remain male dominated, but noted that the female proportion of investors was growing and said women would hold 15% of active trader accounts by the end of this year.

Social media and mobile channels top firms’ strategic plans, they found. Most firms now use social media sites to connect with current and prospective clients. At the same time, online investor communities are becoming more popular.

The report said the range of remote servicing options and functionalities available to bank and brokerage advisors has increased dramatically, enabling advisors to deliver solutions and market insight to a wider audience, while also building new client relationships.

Technology trends include the development of hybrid (self-directed/partially advisor-led) services. Several major firms now offer hybrid investing services that support both DIY investors and those who prefer some professional guidance.

Looking Ahead

The U.S. self-directed population is rebalancing away from traditional investors and more toward the active investor and active trader. The report forecast that overall annual growth rates in the self-directed market would be 4%–6% this year. In 2014–15, the report said, active investors and active traders would comprise 43% and 6% of the total U.S. self-directed market.

For their part, brokers will need to focus on enhancing their trading platforms in order to stand apart from their competitors and attract clients. The report noted that their choice would be to pick from the best-of-breed offering or take advantage of front office developments of clearing providers.

According to the report, firms will allocate considerable resources to digital strategy development. They will continue to develop tablet-based trading platforms, enabling investors to personalize their dashboards and trade multiple asset classes on one platform.

As well, social media strategies will continue to mature. Celent said it expected firms to continue to connect with current and prospective clients through the likes of LinkedIn and Twitter.

— Check out Best Firms for Self-Directed Investors: J.D. Power—2014 on ThinkAdvisor.