MARKETS

Not all DIY investors are ‘jumping in and out’ of the market, some are investing long-term

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Many younger Canadians are turning to self-directed investing to help save for the future, a trend that advisors should see as an opportunity to educate them on the markets, while tying those investments into a broader wealth management plan.

A recent Royal Bank of Canada (RBC) survey shows 48 per cent of participants aged 18 to 34 started self-directed or do-it-yourself (DIY) investing during the pandemic and 87 per cent were doing it to achieve long-term financial goals and future financial security (86 per cent) .

“They aren’t all jumping in and out of the market looking for instant gains – they’re investing for the long term,” says Lori Darlington, chief executive officer of RBC Direct Investing.

Interestingly, Ms. Darlington says the survey also shows about three-quarters of these younger investors believe it’s good to invest some money with an advisor as well as on DIY platforms.

“They see value in both,” she says. “There are a lot of newer investors who are still very much building their knowledge and expertise in making investing decisions.”

More advisors now “recognize and embrace” the fact that many of their clients are investing on their own online, as well as using their service, and they can support these hybrid investors by improving their investment knowledge, Ms. Darlington says.

Jason Heath, certified financial planner and managing director at fee-only planning firm Objective Financial Partners Inc. in Markham, Ont., has several clients who trade online and also work with a portfolio manager.

He sees some benefits in people managing some of their own money, especially as the costs of DIY investing have come down. It also helps them understand how markets work better.

Mr. Heath believes advisors can support these clients by showing them how their DIY portfolios fit into their larger financial plans.

“As long as your portfolio is well-diversified, the investments that you buy and own may be less important than some of the other considerations, like what type of accounts should you be opening up and investing in such as a [registered retirement savings plan] gold [tax-free savings account],” Mr. Heath says.

Advisors can also act as coaches to prevent clients from making poor investment decisions – like panic selling in a market downturn or buying stocks based on hype – that could have an impact on their long-term financial goals.

“The ups and downs of the stock markets lately and during the pandemic are a reminder of the psychological impact of investing,” he says. “Sometimes, an advisor can prevent a DIY investor from making novice investing mistakes. Not everyone is meant for DIY.”

– Brenda Bouw, special to The Globe and Mail

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– Compiled by Globe Advisor staff

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