A recent survey conducted by Aite Group has revealed an interesting concept: shifts in technological communication have greatly impacted the world of investing.
In December of 2011, the research firm surveyed 1,014 investor households to determine how the active retail trading markets are going about their business. The report revealed new shifts congruent with an increasingly younger trading population - namely their choices in trading platforms.
Javier Paz, Aite Group’s senior analyst and author of the report, reveals how the realm of investing is undergoing major changes. He bases his conclusions on trends such as where funds are going, who is trading them, and what exactly is being traded. One of the more prevalent movements, the “where”, was observed in the outflow of capital from large retail securities firms and private banks to online brokerage firms.
For wealth management firms, this brings about an inevitable “sink or swim” ultimatum: adapt with the changes or lose relevancy in a potentially detrimental way. According to the report, 54% of U.S. traders “trade or have traded online.” Paz goes on to illustrate a few draws of managing money online, such as access to new asset classes, an array of tools that can leverage trading success, and general added convenience.
With an increasing amount of activities becoming internet compatible, it's no surprise modernization has affected traditional stock trading as well. While still in the lead, it is becoming less commonplace as ETF and options trading gain ground, which rank a close second and third in popularity.
As Aite group looks at the internet savvy Gen Y investors, they find that approximately 50 million are of investing age. Capturing the attention of this large demographic is critical for wealth management firms because it is this group that will replace their baby boomer clients once they reach retirement. While surveying 1,000 investors (Gen Y making up about a fourth) it was found that 50% are self-directed investors, 70% place at least five trades online per year, 65 % work with a financial advisor, and 40% consider their bank as a primary investment provider.
As a growing number of tasks and functions revamp themselves into one electronic form or another, it makes perfect sense that investing has followed suit. The internet seems to provide the ideal environment for investors to maximize their trading experience. With smart phones becoming an almost permanent fixture in just about everyone’s hand, all of your trading information can now be accessed anytime, anywhere. This is appealing also in the amount of comfort investors are allowed as they can now conduct all trading interactions at their convenience. If you would like to look at Paz’s full report, it can (with membership) be accessed here.
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