Nine out of 10 Americans view technology as more of a life necessity
than a distraction but a passion for people persists across the
generations, according to a new study from Charles Schwab which finds
that people from age 25-75 prefer to rely on a combination of both
humans and technology when it comes to dealing with daily tasks and
managing their money.
The Charles Schwab “Man and Machines” study asked more than 1,800
affluent consumers across four generations about their interaction
preferences for finding answers and solving problems across a range of
topics, and although technology won out over people, the result was
close – just over half (54%) say they prefer to rely on technology while
46 percent still favor interactions with people they know or to whom
they are referred. In examining viewpoints by generation, the study
revealed some surprising differences and similarities, particularly when
comparing Millennials and Gen-Xers, which suggest that age is not a
defining factor in how people approach the use of technology.
A Generational Divide?
When asked to choose between relying on a financial advisor and a
computer algorithm for managing their portfolios, two-thirds (66%) of
all respondents say they still prefer the human touch, and Gen-Xers are
just as likely as Millennials to prefer a portfolio based on a computer
algorithm (40% versus only 30% of Boomers and 24% of Matures).
The study also found that Gen-Xers are in fact more plugged in than the
Millennial generation when it comes to investing: they are more likely
to rely on technology when trading stock and when creating or
maintaining a financial plan. Millennials appear to be seeking
alternatives to technology: they are more likely than any other
generation to feel relief from leaving their devices at home when
vacationing, and more likely to turn toward familiar sources like their
parents instead of seeking answers online on financial matters.
“We’ve come to accept as fact that Millennials are hyper-focused on
using technology and the Internet for all their needs, but it’s clearly
more complicated than that,” said Naureen
Hassan, Charles Schwab executive vice president and head of Schwab
Intelligent PortfoliosTM,
the new automated investment advisory service from Charles Schwab.
Hassan noted that, like other studies, Charles Schwab’s new research
indicates that Millennials are far less likely to invest (62%) than
Matures (87%), Boomers (79%) and Gen-Xers (72%), and far more likely to
put their money in a savings account (38%) than Matures (13%), Boomers
(21%) and Gen X (28%). “Retirement may seem far away, but starting early
can have a significant impact down the road,” she emphasized. “We need
to find a way to get this generation started on the path to investing,
and that will require more than a pure technology-based approach.”
Common Ground between Millennials and Gen-X
The study also found that Millennials and Gen-Xers are more similar than
commonly accepted and larger divisions are found between the two younger
generations and their older counterparts, particularly when it comes to
personal service:
-
Millennials and Gen-Xers are less willing to pay more for personal
service (44% and 47%) than Boomers and Matures (55% and 56%)
-
Millennials and Gen-Xers are less likely to want to discuss investing
strategies with a professional (49% and 48%) compared to Boomers and
Matures (61% and 67%)
-
Millennials and Gen-Xers are more likely to prefer to automate
investing decisions (51% and 52%) compared to Boomers and Matures (39%
and 33%)
Reliance on Technology Has Limits for Everyone
Revealing a general acceptance and trust in technology when it comes to
money, Charles Schwab’s study found that investors across all
generations and asset levels trust that their money is safe when they
manage accounts online (66%). However, there are clear signs that trust
in online interactions can vary depending on the nature of the
interaction. Although technology is the preferred mode for transactions
like booking a flight (96%), getting directions (95%), researching a new
car (91%), and planning a vacation (90%), respondents feel differently
when it comes to more private matters. Across the generations, the vast
majority say they prefer to interact in person when dealing with a
health issue (80%) or finding a date (68%).
When it comes to investing, the human touch still appears to be crucial
in certain situations, especially for Millennials and the ultra-high net
worth. Findings that illustrate a preference for personal interaction
when it comes to investing include:
-
Seventy-five percent of Millennials are more interested in talking
with a professional advisor when their financial situation gets more
complicated compared to 72 percent of Gen-Xers, 71 percent of Boomers
and 64 percent of Matures
-
Sixty-four percent of Millennials are more interested in talking with
a professional advisor when they have a significant life event like
getting married, having a child or dealing with a death in the family
compared to 60 percent of Gen-Xers, 60 percent of Boomers, and 53
percent of Matures
-
The ultra-high net worth ($1 million+) are least likely to prefer
automated investing (39%) or a portfolio based on a computer algorithm
(28%)
“What we’ve found in this study and in our interactions with investors
over the years is that there isn’t a ‘one size fits all’ answer for how
people want to invest or manage their money – they will likely always
want a range of services that incorporate both technology and a human
touch,” said Hassan, who also oversees client experience at Schwab and
the firm’s wealth management capabilities. “That’s why at Charles Schwab
we’ll continue to focus on offering a variety of wealth management
services to give people choice and flexibility – whether that’s online
automated investing, support from financial consultants in our branches,
managed portfolio solutions that address a variety of investment goals
and circumstances, or tools and resources to help people who want to go
it alone.”
About the survey
The survey was conducted by Charles Schwab, one of the largest
full-service investment services firms in the country with $2.53
trillion in total client assets, and Koski Research. The online survey
was fielded between February 18 and 26 among 1,808 consumers. The margin
of error for the total survey sample is 2.3 percentage points.
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.
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Disclosures
Schwab Intelligent Portfolios™ is made available through Schwab Wealth
Investment Advisory, Inc. (“SWIA”), a registered investment advisor.
Portfolio management services are provided by Charles Schwab Investment
Advisory, Inc. (“CSIA”). SWIA and CSIA are affiliates of Charles Schwab
& Co., Inc. (“Schwab”) and subsidiaries of The Charles Schwab
Corporation.
Through its operating subsidiaries, The Charles Schwab Corporation
(NYSE:SCHW) provides a full range of securities brokerage, banking,
money management and financial advisory services to individual investors
and independent investment advisors. Its broker-dealer subsidiary,
Charles Schwab & Co., Inc. (member SIPC,
www.sipc.org),
and 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; compliance and trade monitoring solutions; referrals to
independent fee-based investment advisors; and custodial, operational
and trading support for independent, fee-based investment advisors
through Schwab Advisor Services. Its banking subsidiary, Charles Schwab
Bank (member FDIC and an Equal Housing Lender), provides banking and
lending services and products. Koski Research is not affiliated with the
Charles Schwab Corporation or its affiliates. More information is
available at www.schwab.com
and www.aboutschwab.com.
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Copyright Business Wire 2015