Increase in investment account openings on UK platforms
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Investment platforms have reported an increase in new account openings since the coronavirus pandemic triggered a market liquidation, as investors seek to recover stocks in a plummeting global market and find safe havens for money.
The Share Center reported a 269% increase in brokerage account openings from March 9 to 30, compared to the same period in 2019. March is typically a busy month for investment and savings accounts while Isa season is at its peak, but numbers have exceeded the expected annual increase. Half of all accounts opened on the platform since February 17 were opened in the last two weeks of March.
Interactive Investor, the UK broker, reported a 119% increase in the number of Isa accounts opened on its platform between February 18 and the end of March compared to the previous year. The number of self-invested personal retirement accounts (Sipps) opened also increased by almost 50 percent over the same period. Interactive Investor has recorded record trading volumes since mid-February.
“Volatile markets could be a factor when people are looking for buying opportunities,” said Moira O’Neill, head of personal finance at Interactive Investor. “In these volatile times, investors may also be looking for a safe home for their money.”
Vanguard UK reported a threefold increase in the number of new accounts opened in the first quarter of 2020, compared to the same period in 2019. Account openings in March were up 60% from the previous month.
Vanguard UK has experienced rapid customer growth as it expands its share of the UK market, doubling its customer base in the past year. “We have seen this trend accelerate [since January]”said James Norton, senior investment advisor at Vanguard.
The price correction in the equity market is a factor, he said. “Whether you describe it as a buy into the trough or cheaper market valuations, all of these indicators point to the best time to invest now,” Norton said. He added that it is easier than ever to open an investment account from a cell phone with a small amount of money, and investors have dozens to choose from.
“Many of these investors could be affected in the short term,” he said, as the market could continue to decline as the extent of the economic damage from the coronavirus pandemic remains unknown.
Netwealth, a wealth manager, said new general investment accounts – taxable accounts opened by new and existing clients that would not be bolstered by the looming end of the UK tax year – were up 90% in the first quarter of 2020, compared to the first quarter of 2019.
Charlotte Ransom, Managing Director of Netwealth, said the latest spikes in online platforms were all the more remarkable in light of the fact that the start of 2019 was also a period of rapid growth for account openings, as an optimistic UK rebounded from a sell off in the market. – shutdown at the end of 2018.
“You see people tend to buy in the market when you expect it to go up,” she said. “It’s quite surprising to see this level of interest. . . It is understood that it is very difficult to time. Very few people are convinced that this is the bottom line.
She added, “Even though we have yet to see full capitulation, there is a clear long-term build-up of value for investments. “
Hargreaves Lansdown, the UK’s largest DIY investment platform, declined to provide figures on account openings but noted that more young investors had signed up than usual as the cost of entry into the market was declining. The FTSE 250 fell to its lowest level since 2013. Danny Cox of Hargreaves Lansdown said: “We have seen strong demand for new savings and investment accounts, with a slightly younger profile than we are. we normally waited.
Interactive Investor said the rapid growth of accounts on the platform is also being driven by young investors. Almost 40% of accounts opened between February 18 and March 18 were opened by users under the age of 34, compared to just 18% of accounts during the same period in 2019, an increase of 111%.
While account openings fell 10% over the year among 35-44 year olds, and 7% among 45-54 year olds, according to Interactive, Isa allowances for 30-44 year olds also increased by 30 per year. hundred.
“You can assume they had the resources to allocate to their Isa allocation,” said Richard Wilson, Managing Director of Interactive. “They’re not spending on vacations – everyone’s ski vacations have been canceled.”
Ms Ransom noted that the majority of clients opening accounts on Netwealth’s discretionary platform rolled over existing accounts from other DIY investment providers, or were sitting on cash, rather than opening their first account. “If you’re going through a volatile time, I don’t think a lot of people would support each other to navigate this situation,” she said. “They think it might require some professional expertise.”
Other investment platforms have been overtaken by levels of demand for their services.
Halifax and iWeb, subsidiaries of Lloyd’s Banking Group, have both suspended new account openings for now and have asked customers to only call customer service hotlines if they are in an emergency or faced to a vulnerable situation. Halifax Share Dealing said the platform suspended new accounts because it was already struggling to support its existing customers.