The age of coronavirus lockdowns helped fuel a blistering rise in retail trading, and many rookies even beat the market. But day traders also found that the year’s market gyrations required constant attention and that their amateur trading tools were limited.
So many do-it-yourself investors have decided that they need professional help.
Jeremy Johnson, a 31-year-old ad tech sales manager in Atlanta, started out trading popular stocks on Robinhood and making deposits to his Roth individual retirement account. But after investing more than $15,000 a year on average by himself, Johnson in November decided that it was time to turn to a financial adviser.
“You can save your money all you want,” he said, “but if it’s not doing anything, what does it look like long term?”
The pandemic-fueled surge in the ranks of day traders could have been seen as a death knell for the financial planning and advice industry. But the field continues to grow, since even day traders and people who prefer set-and-forget index fund investments have come to realize that there’s a lot more components involved in building wealth.
Johnson’s new adviser, chosen based on a friend’s recommendation, helped package his life insurance with a mix of whole- and term-based features, bolstered his savings habits and altered his retirement investments to improve their tax structure.
According to a Cerulli Associates research study from October, 40% of U.S. investors surveyed said they need more advice. Those who said they were willing to pay a financial professional rose to 56%, up 5 percentage points from 2019. And 82% of those who are paying for financial advice said that it’s worth the price.
In fact, stock investors who have a financial adviser were more than twice as likely to say that they are very confident that they have the best investment strategy compared with those going at it alone, according to a survey by Franklin Templeton and Gallup.
Increased Confidence Associated With Advisers
After stocks plunged in March over Covid-19 fears, Los Angeles wealth management firm Aspiriant LLC saw greater demand for its services. And another set of new clients arrived later in the year as a wave of initial public offerings hit the market, according to Sandi Bragar, the company’s managing director for planning strategy and research. All told, she said by phone, the firm’s client list grew 32% in 2020.
When Tia Ware, a 30-year-old pharmacist in Virginia, first considered hiring a financial adviser five years ago, she was taken aback by the $1,200 yearly fee.