Canadians are taking the do-it-yourself (DIY) approach to investing for retirement, and more will likely do so in the future, as interest in online investing grows.

Earl Bederman, president of the Toronto-based research firm Investor Economics, says assets held in self-directed RRSP accounts at full-service brokers grew by 3 per cent last year to $147 billion. Online brokers, however, fared much better — their self-directed RRSP accounts grew by 14.2 percent to $52 billion.

So why the move to self-directed RRSPs? Are Canadians losing faith in their financial advisers?

Investors sick and tired

He says investors have a couple of key concerns. The first is churning, when advisers tout certain stocks, persuade you to buy them and then have second thoughts. They then sell the stocks, earning commissions coming and going.

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Investors are also concerned about margin trading. Goldin says many investors complain that bank-owned brokerages expose them to unnecessary risk by putting them into margin accounts, where they are charged interest for investment loans. They feel it’s a conflict of interest, says Goldin.

But is dissatisfaction enough to drive people to the DIY channel in droves? Probably not. One trend that might be driving the growth in DIY investing is that many brokerage firms have abandoned investors who have less than $100,000, forcing them to fend for themselves, as advisers focus on affluent clients. That could be part of it, says Dan Hallett, of research firm Dan Hallett and Associates Inc. in Windsor, Ont. The industry is all chasing the same group of clients. He adds that affluent clients are also more likely to seek advice than those with fewer assets.

Hot stock market

Experts speculate that the real reasons for the increase in DIY investing are a hot stock market, better online investing tools and more-informed investors. Bederman notes that the Canadian stock market has grown very well in the past few years and that has attracted more investors, including those who want to do it themselves.

There’s also a shift in attitude under way, says Connie Stefankiewicz, president and CEO of discount broker BMO InvestorLine in Toronto. Clients have become more informed and more interested in taking a proactive role with their investments. Our clients want to take control themselves.

Better technology

Stefankiewicz notes that the technology driving online trading has improved dramatically since the early 1990s. We’ve made available to our client a broad spectrum of tools and information to allow them to make informed decisions. In the 1990s, she says, everyone had to deal with financial advisers because they were the ones with access to the stock markets and the information investors needed.

Now, investors have access to a range of investing information, filters for winnowing through stocks and mutual funds and tools to help build diversified portfolios, she explains. Investors are being driven, she says, by a growing uneasiness that they won’t have enough savings for retirement.

Expect explosive growth in the DIY investing channel, Forrester Research says. It forecasts that the number of Canadian households trading online will increase 73 percent by 2012 if the markets continue to rise by only 5 per cent a year. By 2012, 1.54 million Canadian households will carry out 16.8 million trades. The bulk of all those trades will involve individual stocks, as opposed to mutual funds or bonds.

Forrester notes that the growth coincides with increasing access to the Internet. Today, three-quarters of Canadian households report they are online at least once a month.

Jim Middlemiss is editor of Canadian Lawyer magazine and co-author of Your Guide to Canadian Law. He’s a frequent contributor to the National Post and Investment Executive.