Broker First, Web Second

Six-figure professionals find the Internet to be a valuable source of investment information, research from Nationwide Financial indicates, but the Web is no substitute for relationships with their brokers.

The survey, which polled 500 high-income professionals (annual household incomes greater than $150,000 per year), found that 35 percent of the respondents used the Internet for financial planning assistance – an 18 percent increase from last year. Furthermore, 11 percent claim the Internet is the source of financial planning help they use most frequently.

“As high-income investors seek more education about their investment plans to protect themselves from a volatile market, they are increasingly using the Internet as a regular part of their financial planning activities,” said Mathew Greenwald, president of Greenwald & Associates, the Washington D.C.- based independent polling firm that conducted the survey. “And the results indicate that the number is growing, and those who do use it are using it even more often.”

Other sources of independent financial research for high-income professionals are: newspaper (30 percent); magazines (23 percent); friends and family (16 percent); books (15 percent); and broadcast television or radio (10 percent).

High-income investors are not only using the Internet for information, some of them are also turning to it to make simple transactions. Seventeen percent say the Internet is the first resource they use to make stock trades, and 13 percent go to the Web first to invest in the stock market. Almost half (45 percent) of those surveyed indicated that they use the Web for a variety of financial planning activities:

High-Income Professionals Use the Web for a
Variety of Financial Planning Activities
2001 2002
Researching specific investments 74% 81%
Opening investment or brokerage account 34% 38%
Performing stock or other investment trades 45% 46%
Purchasing an insurance product 6% 9%
Using a financial planning site to estimate
your financial planning needs
23% 28%
Communicating with your financial advisor 20% 24%
Tracking your investment portfolio 55% 54%
Doing general research on financial planning,
retirement and estate planning
53% 51%
Source: Nationwide Financial Services, Inc.

The survey also revealed that affluent men are more likely than their female counterparts to use the Internet for help with financial planning (39 percent vs. 30 percent), for investment or financial planning activities (55 percent vs. 38 percent), and as a source of financial information (79 percent vs. 60 percent).

Additionally, respondents younger than 40 years old use the Internet for financial planning help more frequently in general. In fact, the younger high-income professionals were the most likely to report using the Internet as a source of financial planning help most frequently (21 percent vs. 9 percent).

“The survey still reflects that the relationship between advisor and client is irreplaceable and most valuable, but the Internet is significantly growing in popularity with high-income clients as a tool for education and information,” said Michael Butler, senior vice president of Nationwide Financial Distributors, Inc. “They clearly rely upon it as a supplement to their in-person financial advisor.”

Sources of Financial Planning Help for
High-Income Professionals
2001 2002
Professional investment advisor 70% 54%
Stockbroker or national firm 54% 32%
Accountant 50% 22%
Attorney 23% 13%
Banker 18% 7%
Insurance Agent 27% 7%
Source: Nationwide Financial Services, Inc.

Forty-four percent of high-income professionals surveyed report that they have never switched their main source of financial planning help. Furthermore, 46 percent have changed sources of advice only once or twice.

Nine percent of respondents have changed advisors more than three times and some of the reasons respondents gave for switching were:

  • They met another advisor who seemed more appealing (63 percent).
  • They were dissatisfied with investment performance (54 percent).
  • Their advisor did not communicate frequently enough (54 percent).
  • Their advisor did not provide enough information or options (45 percent).
  • Their advisor did not have their best interest in mind (34 percent).

And even though the majority still check financial advice with their own research or even a second opinion, survey respondents report a strong sense of confidence in their current advisor:

  • 88 percent say their advisor takes extra time to explain things they don’t understand.
  • 86 percent are confident their advisor presents objective analysis.
  • 85 percent are confident their advisor always has their best interests in mind.
  • 83 percent feel their advisor does a good job staying in touch with them.

The investors that are going online for financial planning information are most likely clicking over to Yahoo Finance. The site was ranked the top destination in the U.S. for financial information in June 2002, according to Nielsen//NetRatings, with 8.19 million unique visitors spending an average of 44 minutes per month making use of the data.

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