While FT Alphaville is not aimed at a retail investment audience*, we do attract a small number of “what should I do with my pension?” and “isn’t GKP amazing?” type commenters.
So it was with interest that we noted the results of a Harris Interactive survey which found that:
Financial websites and blogs (49%) and financial print publications (39%) are currently used by more young investors for advice than financial planners (35%) or brokers (18%).
Harris/ING
The Harris study, which was commissioned by ING Direct’s ShareBuilder, defined ‘younger investors’ as those within the 21-39 age bracket.
Overall, Harris polled some 1,021 ‘general investors’ between the ages of 21 and 61 “who have an investment account that enables them to buy stocks, funds and other securities other than a 401k or 403b”.
Dominic Jones of IR Web Report and Zack Miller of the New Rules of Investing blog both weighed on the survey’s findings.
As Jones argued, taking the point of view of investor relations professionals:
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.
While Miller made some salient points regarding sampling bias and a possibly false amateur vs professional divide:
- – Only ShareBuilder clients were surveyed, so the fact that these investors are using the Internet to conduct research shouldn’t be all that surprising. I’d be curious to see a Pew-like survey that addresses this issue. It’s like saying people who use Macs buy more on iTunes.
- - The survey makes the claim that investors are turning to the Internet at the cost of tapping professional advice. What’s happening here though is that much of the investment commentary/research we read online has been written by professionals. They’re writing this stuff with the hope (dream?) of landing some of the people who read it as clients. So, in fact, investors are consulting professionals and consuming profession advice — they’re just not paying for it directly.
[UPDATE: As we noted above, the Harris poll was broader than just ING/ShareBuilder customers, so Miller's point on sampling is overstating the case. A spokesman for ING said the bank did indeed conduct a survey of only ShareBuilder customers, but those results were not included in the press release or white paper.]
We’d have to disagree with Miller slightly, and argue that while some of what those day-trading/retail types are reading might be written by professionals, a scary amount of what they are referring to comes from the message boards at Yahoo Finance, ADVFN and III. (And, presumably, the likes of Vince Stanzione)
Caveat trader.
(*A note to PRs: Please, please stop sending us personal finance releases. Seriously)
Related links:
Blockbusted? – FT Alphaville
The SEC’s retail focus – FT Alphaville
Aggressive FX marketing goes mainstream – FT Alphaville
Corporate Blogs and ‘Tweets’ Must Keep SEC in Mind – WSJ