COVID-19 has accelerated the adoption of technology across many
aspects of life, from virtual birthday parties to appointments with
financial advisors by video chat, according to a new study by
Charles Schwab. When it comes to personal finances, four in 10
investors (41%) report that they used technology and digital tools
to manage their finances more during the COVID-19 pandemic than
ever before, and 32 percent say they will continue to adopt
technology at a faster rate post-pandemic. One in five investors
(19%) believes that technology will fully manage their investment
portfolio within a year. Yet human support remains critical among
new and seasoned investors alike in times of uncertainty – both say
the first place they turn during market swings is a financial
advisor.
“The pandemic spurred rapid adoption of digital investing tools
and technology, creating a unique opportunity for financial
services companies to innovate how we serve customers and continue
to build trust,” says Neesha Hathi, Schwab’s Chief Digital Officer.
“The past year has reinforced that it’s not a question of meeting
investors either digitally or in person – but combining the best of
both to engage investors where and when they are looking to take
action to manage their finances.”
Technology is top pick for financial transactions, but when
finances get tough investors need the human touch
When it comes to interacting with a financial institution,
investors fall into three evenly divided groups as to whether they
prefer to engage primarily through technology or people. Around a
third prefers mostly using technology (37%), a third prefers mostly
talking to a person (32%), and a third prefers a combination of
technology and in-person interactions on an ongoing basis (31%).
And while 54 percent of investors believe it is possible to have a
personal relationship with a financial company by interacting with
them only through technology, most also agree that there are times
for technology, and other circumstances that merit an interaction
with a person.
Most investors say that technology is best for more
transactional activities:
- 71% say that technology is best for simple, more transactional
financial tasks, such as tracking expenses, but not for complex
ones
- 71% say that technology helps them reach their financial
goals
- 70% say that technology decreases the amount of time they spend
managing their finances
- 65% say that technology gives them peace of mind when it comes
to their finances
“People are used to doing everything on their phones, and they
expect managing their finances to be as easy as one-click online
shopping or hailing a ride share,” says Zack Gipson, managing
director of Schwab’s digital investor solutions. “This sets a high
bar for financial services companies to deliver easy, modern
digital experiences that rival digitally-native companies consumers
trust, while differentiating through seamlessly integrating the
best of technology and people.”
While the pandemic forced more investors to manage their
finances through technology, many plan to continue conducting a
range of financial activities digitally after the pandemic subsides
– such as using payment apps (46%), using online tools and apps to
manage personal finances (39%), and using virtual meetings to
connect with a financial advisor (23%).
In contrast, investors want to lean on human financial
professionals when their finances get complicated. Most investors
agree that it is very important to have access to a professional
when they have questions (59%), for periodic or ongoing guidance
(51%), or when the stock market has large gains or drops (50%). In
fact, investors would seek guidance from a financial advisor over
any other resource (e.g., financial websites, influencers,
friends/family) if the stock market significantly dropped (40%).
Additionally, investors’ trust in a financial firm is also impacted
by whether they have access to service in-person – such as a branch
(96% agree).
Investors also feel that human financial professionals do it
best when it comes to complex tasks such as:
- Giving financial advice (78%)
- Providing customer support on account questions (76%)
- Understanding an investor’s entire financial situation
(72%)
- Creating a personalized investment portfolio (69%) or financial
plan (66%)
Generation Investor (Gen I) is tech savvy but demands much
more than an easy investing app
During the uncertainty of a global pandemic and waves of market
volatility in 2020, an influx of first-time investors got into the
market. This cohort – which Schwab dubbed Generation Investor (Gen
I) – makes up 15 percent of U.S. stock market investors according
to previous Schwab data.
The new study affirms that Gen I is a rapid adopter of
technology when compared to ‘seasoned investors’ (those who began
investing before 2020). Most of Gen I (74%) thinks they can have a
personal relationship with a financial company by interacting with
them only through a mobile app or online, and they rely on
technology to manage their finances in many ways:
Gen I
Seasoned Investors
Anticipates adopting technology to
manage money at faster rate than pre-pandemic
45%
29%
Thinks they will manage their
investment portfolios entirely through technology within one
year
35%
15%
Prefers to engage with their financial
institution through technology
48%
32%
Prefers to engage with their financial
institution through a person
22%
36%
Prefers to engage with their financial
institution through a combination of people and technology
30%
32%
At the same time, access to human financial professionals is
critical to Gen I when it comes to other aspects of money
management. Over half of Gen I feel that professionals manage the
following activities better than technology:
- Giving financial advice (64%)
- Understanding their entire financial situation (63%)
- Providing support on account questions (61%)
- Creating a personalized investment portfolio (56%)
- Answering questions about their financial situation (56%)
- Creating a financial plan (55%)
- Doing taxes (54%)
- Maximizing investment returns (51%)
And when finances become complex, such as when the stock market
sees a significant gain or downturn, 83 percent of Gen I wants
access to a person to discuss their situation.
“Gen I members trust technology with many aspects of their
financial lives, but they also understand that investing isn’t
confined to a mobile app,” says Anthea Tjuanakis Cox, managing
director of digital planning. “When their financial lives start to
get complicated or market swings cause anxiety, they want access to
a person for guidance.”
For more information on Schwab’s range of high tech to high
touch modern investment advisory offerings, visit
www.schwab.com/investment-advice
For more information on how investors can engage digitally with
Schwab, visit www.schwab.com/go-digital
About the Survey
The online survey was conducted by Logica Research from June 14
to June 28, 2021, among a national sample of 1,000 Americans
investors aged 18 to 75 and an augment sample of 200 investors who
began investing in 2020 or 2021, as well as an augment sample of
200 affluent investors. Quotas were set to balance the national
sample on key demographic variables. Supporting documentation for
any claims or statistical information is available upon request.
Detailed results can be found here.
About Charles Schwab
At Charles Schwab we believe in the power of investing to help
individuals create a better tomorrow. We have a history of
challenging the status quo in our industry, innovating in ways that
benefit investors and the advisors and employers who serve them,
and championing our clients’ goals with passion and integrity.
More information is available at www.aboutschwab.com. Follow us
on Twitter, Facebook, YouTube and LinkedIn.
Disclosures:
Brokerage Products: Not FDIC Insured • No Bank Guarantee •
May Lose Value
Through its operating subsidiaries, the company provides a full
range of wealth management, securities brokerage, banking, asset
management, custody, and financial advisory services to individual
investors and independent investment advisors. Its broker-dealer
subsidiaries and their affiliates offer a complete range of
investment services and products including an extensive selection
of mutual funds; financial planning and investment advice;
retirement plan and equity compensation plan services; referrals to
independent, fee-based investment advisors; and custodial,
operational and trading support for independent, fee-based
investment advisors through Schwab Advisor Services. Its primary
banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an
Equal Housing Lender), provides banking and lending services and
products.
TD Ameritrade, Inc. and TD Ameritrade Clearing, Inc., members
FINRA/SIPC, are separate but affiliated companies and subsidiaries
of TD Ameritrade Holding Corporation. TD Ameritrade Holding
Corporation is a wholly owned subsidiary of The Charles Schwab
Corporation. TD Ameritrade is a trademark jointly owned by TD
Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.
(0921-1S5L)
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Marianne Ahlmann Charles Schwab 415-667-1115
marianne.ahlmann@schwab.com
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