Fundamental changes in private investment are currently observable for the German retail investment market. Whereas individual investors' financial asset selection behavior was traditionally accounted for by a large proportion of cash and deposits, investors increasingly assume riskier and more sophisticated portfolios. The mutual fund market is undergoing significant growth, partly spurred by cutbacks in the state-run pension system. Alongside this investment trend, the markets for exchange-traded funds (ETFs) and certificates have developed exponentially.
In the online brokerage arena, competition for the provision of integrated services is one of the major trends. Major players tend to supplement the classical brokerage business with advisory services and additional services from the banking, insurance, and mortgage lines. Some brokerages have also established a limited physical presence.
"The German retail brokerage market is highly concentrated. Niches for new market entrants remain, but the competition to seize them will be aggressive," notes co-author and Securities & Investments analyst Isabel Schauerte.
"The market is ready to take on more risks. Private investors have taken to buying certificates and ETFs with a ferocity that undermines the belief that Germans have no stomach for financial innovation," she adds.