Nearly 30 per cent of high net worth investors in the US define themselves as “self-directed” and over half have direct or online trading account balances of between $500,000 and $1 million, according to new research from Cerulli Associates.

The report is called High-Net-Worth and Ultra-High-Net-Worth Markets 2014: Addressing the Unique Needs of Wealthy Families.

The “immense balances” that many of these investors have within their self-directed accounts are further proof that direct channel providers represent increasingly worthy competitors that will “likely test traditional managers' willingness, and aptitude, to adapt to next-generation investors.”

The self-directed model does however become less favorable relative to other advice models as assets increase, noted Donnie Ethier, associate director at the Boston-based research firm.

“Logically, as assets increase, so does the complexity of portfolios, lending more credence to taking on an external advice sources and provider relationships,” Ethier said. “In addition to dealing with complex portfolios, advisors are an added expenditure, which can explain their lower use among retail clients.”

Cerulli also noted that many high net worth investors use direct accounts to test their own investment ideas, provide liquidity and even to shelter assets from their primary advisors.

“High net worth and ultra high net worth clients that are using a self-directed model represent a significant opportunity for asset managers that pass due diligence screenings. In the end, direct providers are yet another avenue for external managers to reach the pool of high net worth assets,” Ethier said.