Study Suggests In-Person Financial Advice Remains Highest

NAPA Net I’s Ted Godbout, reported on an online survey conducted April 9-20, 2018, by Convergys for Merrill Edge Report. The online survey polled 1,000 respondents with investable assets between $20,000 – $250,000.

This report indicated that wealthy Americans still value in-person knowledge and expertise for financial advice over emerging technologies that are shaping the future of financial guidance. When it comes to making financial decisions:

  • 81% of respondents are most likely to turn to a financial adviser over
    • their closest confidants, including their wealthiest friends -70%,
    • older generations – 69%
    • parents – 66%
    • friends – 57%

Although they indicated a preference for in-person advice, the respondents reported that they are growing more comfortable with emerging technology to manage their finances. Half of the respondents said they are turning to apps for financial advice, and 20% said they prefer digital advice to in-person directions.

60% of those surveyed already are using AI (artificial intelligence) to pay bills, 45% use it to provide spending and savings guidance and 32% use AI for making investments. A full 40% said they are comfortable consulting AI for financial guidance and trust it with their finances more than they do to post to social media (28%), drive a car (28%), or select a wardrobe (26%).

69% of respondents believe that all financial decisions will be made with the help of technology and 51% believe that all money will be digital within their lifetimes. 78% predict that over the next 20 years the highest performing stocks will be for technologies that do not yet exist.

Tactical Investing

These surveyed mass affluent investors, indicated social responsibility and community welfare are growing in importance. When choosing investments, they are more likely to invest in companies that:

  • provide equal compensation to both women and men (87%);
  • promote diverse senior leadership (85%);
  • exhibit a commitment to environmental sustainability (82%);
  • offer three or more months of family leave (78%);
  • support the LGBTQ community (61 %); and
  • share their religious beliefs (62%).

However, respondents still attach more importance to financial gain over social ideals. Merrill reported that respondents pursued the following investment strategies:

  • invest in stock based on market performance (88%), followed by its ability to pay dividends (85%).
  • 60% said they would be more likely to invest in a profitable company, despite disagreements in values, than investing in a struggling company whose values they share (40%).
  • over half (57%) are more likely to invest in the most profitable company, regardless of its sector, over a company with a focus on environmental assets (43%).

Aron Levine, head of Merrill Edge, said “While we’re seeing rapid adoption of emerging technologies, investors truly want the best of both worlds — digital and physical — when it comes to decision-making, not one or the other.”

As mentioned above, the survey was conducted April 9-20, 2018. It consisted of 1,000 mass affluent respondents aged 18 to 40 with investable assets between $50,000 and $250,000 or those aged 18 to 40 who had investable assets between $20,000 and $50,000 with an annual income of at least $50,000; or aged 41-plus with investable assets between $50,000 and $250,000.

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