A SURVEY has found that financial websites and blogs are the top influences on U.S. individual investors, while those under age 40 are more heavily influenced by family, friends and work colleagues than are older investors.
The findings reinforce the importance of the web in shaping investors’ investment decisions and highlight the potential for information shared between friends on social networks to become strategically important to investor relations professionals. Meanwhile, the influence of financial advisors is waning.
Conducted online from January 7 to 19, 2010 by Harris Interactive, the study surveyed 1,021 general investors between the ages of 21 and 65, and 912 ING Direct ShareBuilder customers within the same age groups.
Web and social networks key influences
The study found that younger investors, defined as those aged 21 to 39, differ from their older counterparts in that they are far more likely to rely on family (40% v. 19%), friends (27% v. 14%) and work colleagues (17% v. 6%).
Given that many investors today rely on online social networks like Facebook to stay in touch with friends and family, the potential of recommendations via social networks to influence investor actions appears to be growing.
The study also found that financial websites and blogs were the most influential external influences for both younger investors (49%) and those age 40 and older (47%). Financial print publications ranked second with both groups.
Increased self-reliance and dwindling influence of financial professionals
Meanwhile, younger investors are much less likely to rely on advice from financial professionals than their older counterparts.
Only 35% of younger investors said they were currently using a financial planner compared to 39% of older investors. When it came using brokers, however, only 18% of younger investors said they use them compared to 36% of those over 40.
The study’s authors say the “losses they incurred in 2008/2009 and the questionable practices of some financial institutions have caused investors to re-evaluate their reliance on financial advisors and brokers for investing advice.”
Fully 45% of U.S. investors say they have reduced or stopped using financial professionals for investing advice. Older investors are leading this trend, says the study, with almost half (49%) of those over 40 having cut or halted their reliance compared to 37% of younger investors
A whitepaper on the study is embedded below