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.

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Marianne Ahlmann Charles Schwab 415-667-1115 marianne.ahlmann@schwab.com

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