Even though individual investors have more tools available to them than ever before, a survey by PR Newswire and the National Associations of Investors Corp. (NAIC) found that retail investors find online media Web sites and traditional resources more valuable than Webcasts in helping them make investment decisions.
The 2000 Individual Investors Online survey, conducted online during the month of August, polled 1,034 individual investors on their use of the Internet and on their research habits. Aggregate financial and investment Web sites were the most used, with 64 percent citing them as one of their top picks. They were also considered the most credible source of information by 48 percent, followed by information from the NAIC and business and financial print magazines. A full 68 percent said that they visit the company’s Web site before investing.
“Individual investors are becoming more Web savvy. They want information quickly from companies and they enjoy the convenience of online transactions, but they may not fully understand the value of a corporate earnings conference call,” said Michelle Savage, PR Newswire’s VP of investor relations services. “They are less inclined to believe everything they read on the Internet. Most of them visit the company Web site before they make the final investment decision, so it’s important that corporations position their sites as a credible source of information.”
While the results were similar to last year, Savage said, the survey indicated a wider use of the available online investment tools in conjunction with traditional sources.
|What Investors Want
From Corporate Web Sites
|Ability to contact IR
|E-mail news releases
|Closing stock price
|New SEC filings
|Source: PR Newswire/NAIC
Conference calls decreased in interest with only 44 percent citing an interest to listen compared with 53 percent last year. Although the poll was conducted before the SEC passed Regulation FD to open up calls to all investors, the results suggest that individual investors find the content of these calls too technical. Sixty percent would like to email questions to a company representative while listening and 50 percent wish to follow along with slide shows. Accessing these calls should not be an issue for individual investors as other sources show that 79 percent of households today have streaming media capabilities, according to the survey.
Savage said the decrease in conference call interest may have to do with an increase in the length of news releases.
“Investor relations professionals are attempting to include all material information in their release so as to ensure compliance with the new regulation,” she said. “Individual investors who dial in may find that limited or no new information is disclosed so they don’t return. The lack of interest may also be due to the fact that these calls are complicated because they are targeted to professional investors. Companies seeking to conduct more calls on the Web to comply with Reg FD should examine how they conduct their calls to be more inclusive of this new audience.”
According to the survey, interactivity and basic financial data are the most important elements on a corporate Web site to individual investors. Seventy-two percent said they would like to receive automatic emails of news releases, while 63 percent wanted closing stock prices and 59 percent wanted notification of new SEC filings. Eighty-seven percent said they want to be able to contact the IR professional directly through their Web site. Ninety-one percent said that timeliness and consistency in communications from companies is important, with 77 percent expressing interest in receiving documents such as annual reports and proxy forms electronically.
The 200 survey also showed an increase in the use of online resources by individual investors. Nearly three-quarters (74 percent) of the respondents trade online, with 48 percent making more than one trade per month. In 1999, 50.8 percent traded online. Interest in the ability to submit proxy votes online was 89 percent in 2000, compared to 80 percent in 1999. Sixty-four percent of this year’s respondents say they research investments online for more than six hours per week.
Of those surveyed, 24 percent said they participate in chat rooms and 28 percent would use information posted on a message board, but only 1 percent considered information in chat rooms to be credible compared with 6 percent for message boards. Six percent said gripe sites definitely influence their investment decisions.