Study Finds Increase in Investors Who Use Technology

“Since 2010, the use of technology for investment information exploded. The biggest gains were in investors watching videos, a 350% increase, and attending Webcasts, a 300% increase,” said Chris Brown, Hearts & Wallets Principal, in a press release. “Other big gainers were assessing potential new providers by their Web sites, reading blogs and traditional media online, subscribing to investment services (such as Morningstar or paid newsletters), and using tools and calculators.”

Hearts & Wallets suggests one reason for the huge increase may be investors are using technology to supplement other traditional go-to resources. Shaken by market gyrations, nervous savers are using technology for pre-work before contacting a financial professional, to check up on their adviser, and to monitor their adviser’s account management.

“In the Quant Panel, we found fewer people are consulting financial advisers for any advice,” said Laura Varas, Hearts & Wallets Principal. “Also, the number of investors dropped who rely upon themselves for financial advice. Where are they going for financial information? Technology is supplementing, and in some cases, possibly replacing human advice.”

Yet for all the blogs, Web sites, and other financial resources at their fingertips, many American savers – one-third of all survey participants – say they are “very inexperienced” with investing, a 20% increase in just one year. A common belief among American savers – including Gen Yers – is that it is not possible to improve one’s financial situation or that financial resources are scarce. 

“This type of mindset has major ramifications for a large part of the U.S. population in how proactive they will be toward saving for retirement as well as implications for the financial industry,” said Brown. “It is important the industry provide educational programs to build consumer financial confidence and literacy. The survey shows younger investors are almost as risk adverse as pre-retirees, which does not bode well for willingness to invest in 401(k) plans.”

The study revealed a significant shift in market share for banks versus other financial services channels. Since 2008, banks have steadily gained from 16% to 25% among affluent/high-net worth “Accumulators,” which Hearts & Wallets defines as investors ages 21 to 64 who are not planning to retire within five years. Banking products grew across all age groups, in part because investors are seeking more security in financial products. Convenience may also play a part with the broad offerings of banking institutions.