An increasing number of people are shunning intermediaries and instead choosing to invest directly.

New research by CoreData Research UK shows product manufacturers need to look beyond distribution through financial advisers for future growth as the UK direct market explodes.

Of the 3.27 million households in Britain actively investing in the market, some 2.1 million households invest directly according to the latest research from CoreData Research UK.

That figure represents those active investors who have previously used an adviser but no longer do (1.09 million) or have never engaged with an adviser (1.01 million).

Of the remaining 1,175,116 people who do seek advice, 543,369 have a dedicated financial adviser while 631,747 engage with an adviser only intermittently.

The size of the direct market in the UK sends a clear sign to companies exclusively reliant on financial advisers for their product distribution that advisers only constitute a slice of the pie when it comes to retail investing.

The study of more than 1700 financial advisers conducted in mid-2010 revealed UK financial planners on average have 287 clients on their books.

A large chunk of these are often legacy clients whereby advisers have limited or no contact with the individual in question but may be linked through a product once sold to that individual.

In reality there are many instances whereby an individual is linked to an adviser through a product but is unaware or cannot recollect – this pulls in the millions of non-active investors in Britain.

Therefore at a minimum, the 35.5% of the active investor market who engage ongoing or intermittently with an adviser account for an average of 27.3% of all UK advice clients*.

Though this figure could be as much as 50%, in terms of actively engaged advice clients and if advisers were to exclude legacy clients.

However the core problem facing adviser dependent product manufacturers is that the advice market is shrinking and will continue to do so ahead of, at, and post RDR (Retail Distribution Review).

The above mentioned study found up to as many as 3000 advisers expect to exit the industry by 2015.

Reflecting the perceptions people often have around what level of assets are required before approaching a professional – on average, advised investors have notably higher levels of assets than non-advised – £175k v £97k.

Self-directed investors typically hold a higher proportion of their assets in direct shares compared to advised investors, reflecting the adviser usage of managed funds.

*Based on an assumption of 15,000 practicing investment advisers across the industry, having discounted for licensed but inactive advisers and advisers who don’t offer investment advice but are heavily risk advice focused instead).