The largest and wealthiest group of consumers blend traditional advice with self-serve investing

BYLINE: Vito De Filippis


The rise of discount brokerages, direct banks and the emergence of robo-advisors has fragmented the financial services industry. To protect their market share, firms that were once devoted to providing face-to-face client advice have established new divisions to serve self-directed consumers. This two-pronged approach is shaping everything from their product offerings to their marketing strategies. Typically, financial institutions want to separate profiles of these two distinct consumer types, but what if the most attractive—and lucrative—market is a blend of self-directed and advice-seeking consumers?

At some level, the notion that there are consumers who seek out advice and manage part of their portfolios may not seem like much of a surprise. Advisors, for instance, have long known that some of their clients are reluctant to entrust them with their full portfolios, even though doing so is essential to provide a comprehensive financial plan. What is surprising is how large this group of “Hybrid Consumers” is in Canada.

After analyzing Canadians (excluding Quebec) over age 18, we found that almost a quarter of the market falls into the Hybrid Consumers camp. To put that into perspective, that is only slightly behind the number of Self-Directed Investors we found, while just under half of the consumers we studied rely on professional financial advice.

Our analysis also found that Hybrid Consumers are quite distinct in terms of their financial needs. Their financial profile and their social values suggest they respond to different marketing messages and product pitches compared to the other two segments. More importantly, they are also more willing to pay for advice. Financial institutions need to determine how many of their existing clients fall into the Hybrid Consumers bucket, as well as learn who they are and where they are concentrated so they can engage them appropriately.

How do you create a profile of the consumer segment?

Knowing that this group of Hybrid Consumers exists is one thing, but identifying and locating them is what matters most to the financial sector. To identify these three consumer types we began by scouring several of our proprietary databases to select variables that would delineate the different types of behaviours representative of our three segments: Advice Seekers, Self-Directed Investors and Hybrid Consumers. We looked at variables from MoneyMatters Powered by Canadian Financial Monitor, which tracks consumer behaviour and how they interact with financial institutions, and Opticks eShopper Powered by AskingCanadians™, which includes data on online researching and purchasing habits for financial products. We then profiled them using PRIZM, our comprehensive segmentation system, and looked for patterns to assign those variables to one of our three custom segments.

Finally, we layered on additional demographic, behavioural and psychographic data to flesh out the segments and describe where they live, as well as understand the type of messages and most effective channels to engage them.

Figure 1: Where to find Advice Seekers, Self-Directed Investors and Hybrid Consumers




What are the financial differences by segment?

Our analysis found that their banking and financial habits are quite distinct. Advice Seekers, the largest of the three segments, tends to favour credit unions, which may have to do with the fact that a large number of these consumers live in small towns and rural parts of Canada, where credit unions tend to be more accessible. This segment seeks out advice by choice, not because they need help answering complex financial questions. With below average household incomes and a large proportion entering retirement, they do not have large investment portfolios or savings that require complex advice.

Self-Directed Investors, in contrast, have higher incomes and larger debts. Typically, they lead busy lives, so they prefer the speed and convenience of direct banking and discount brokerages. While they have above average household incomes, they are in a life stage where most of their equity is in real estate instead of liquid investments, like stocks, bonds, ETFs and mutual funds. While they are aspirational, they are still establishing themselves, so saving money on banking charges and management fees is valuable to them. Their real estate holdings may also help explain their high debt levels; many of these consumers are concentrated in major city centres and surrounding municipalities where home prices have been increasing in recent years, so they need to seek out large mortgages with competitive rates to afford a home.

The Hybrid Consumers group is the highest value segment. They use both discount and full-service brokers at high rates and tend to spread their wealth across all types of products and services. They have an average household income of $131,284 and an above average net worth. The consumers in this segment tend to hold lucrative jobs in finance and business. What truly sets this group apart from the other segments has to do with why they are interacting with their financial institution. For starters, they are more likely to hold a diverse portfolio of investments that benefit from professional financial advice. However, while financial advisors manage some of these investments, Hybrid Consumers opt to maintain their less complex holdings using self-directed investing tools. They are more likely to apply for credit cards and insurance online and they are more likely to have an account with a direct bank, indicating that they may be parking money where there are better rates available or trying to avoid fees for everyday banking.

What type of messaging will resonate with consumers?

Advice Seekers are on the opposite end of the spectrum. They prefer traditional media—TV, radio and newspapers—and they tend to watch sports, reality shows and entertainment news. These older families have embraced a strong sense of community. As such, they frequently read community newspapers and often respond to advertisements within those papers. Given the older demographic of this segment, financial institutions may want to target these consumers with messages about how they can secure their financial future.

Hybrid Consumers have diverse media consumption habits—they are heavy users of the Internet and social media, but they also like to read newspapers. Since they are wealthy and more likely to hold managerial jobs in business and finance, they are willing to pay more for technology that saves them time. Accordingly, financial institutions should devise solutions that capture their attention and offer convenience. For this group, it’s all about asset management and how they can grow their wealth. Notably, they have a very different mindset from the other two segments. They feel compelled to question everything around them and avoid the status quo. That, combined with their desire to control their financial security and their willingness to try new things, helps explain why they choose to spread their finances around between direct banks and traditional advisors.

Because this group is highly concentrated in urban centres they often rely on transit, which suggests that placing ads around the city on bus shelters and in subways may be an effective way to reach this audience. They are also more likely to enjoy a night out and take in a concert. Financial institutions hoping to boost their brand awareness and align their brands with their consumers’ value could consider sponsoring such events or incorporate images from those events into their messaging. Similarly, Hybrid Consumers index high for yoga and Pilates, so producing ads that send a message of a healthy and active lifestyle may also help appeal to this elusive group.

Vito De Filippis is a leader in the finance practice at Environics Analytics. To learn more about your existing clients, to determine your share of wallet, or to find effective ways to engage the three types of consumers visit