Tracking Clients

Wouldn't you like to peek over your client's shoulder and watch how he manages his finances and investments online? Now you can. In April, Registered Representative conducted a national telephone survey of 200 clients to see what they are up to on the Internet. Turns out they are quite busy surfing the Web for investment ideas, tapping out e-mails to their reps and writing virtual checks to pay bills

Wouldn't you like to peek over your client's shoulder and watch how he manages his finances and investments online? Now you can.

In April, Registered Representative conducted a national telephone survey of 200 clients to see what they are up to on the Internet.

Turns out they are quite busy surfing the Web for investment ideas, tapping out e-mails to their reps and writing virtual checks to pay bills among other things. Each week, the median amount of time a client spends on financial activities is 1 hour. The mean is 1.6 hours.

There's a sizable opportunity for reps to get involved, too. More than a third (37%) of respondents say they have never talked to their broker or planner about their online financial activities. And two in three respondents say they would like some help and guidance from their adviser related to the Internet. Meanwhile, only about half are getting any assistance now.

Desire for help varies according to age and portfolio size, the survey reveals. Surprisingly, younger investors want help more often than older folks. About 73% of respondents age 40 to 49 would like help, compared with only 45% of those age 60 or older. People with smaller portfolios are more likely to want help, at 72%, compared with 60% of those with portfolios of $100,000 or more.

Monitoring Client Behavior

The most popular client activities online are reading general financial news, doing research about investments, accessing account information, receiving investment newsletters and paying bills.

Making a transaction is far less popular, with only 27% saying they have bought or sold an investment. And despite some brokers' fears, this group of clients is not taking their business elsewhere. Only 11% say they have bought their adviser's idea online.

By comparing current activity to future activity, the research reveals where clients are headed. Particularly notable is clients' interest in using technology to work with their advisers. The biggest jump (21%) comes in people wanting to look at their account online while talking to their broker. Another 17% increase is among people who want to e-mail their rep. Paying bills online and using an account aggregator are also popular future activities.

Interestingly, using online calculators is not nearly as popular as other activities. Calculators for retirement planning, mortgage analysis and taxes have each been used by only about one-third of respondents. Almost 40% of respondents have never used a calculator, and almost the same number (35%) say they don't plan to in the future.

Watching the Clock

Just more than half of the respondents spend 1 hour a week doing financial-oriented tasks online. Another quarter spends between 1 and 2 hours and 13% spend between 2 and 4 hours. The smallest group (12%) spends 4 hours or more.

Differences in the time commitment emerge when comparing groups of various ages, incomes and portfolio sizes. Generally speaking, folks age 60-plus spend slightly less time each week online than younger groups. Those with smaller household incomes spend slightly more time than those earning $100,000 or more. And people with larger portfolios of $100,000 or more spend more time with their finances online than those with smaller accounts.

Rating the Firm

The survey gauges clients' impressions of their primary investment institution's online technology. It asks questions related to value and ease of use. And the feeling seems to be that the sites are mediocre.

Respondents give firm sites' value a slightly better than neutral assessment. On a scale of 1 to 5 with 5 being extremely valuable and 1 being not at all valuable, the mean score was 3.41.

In particular, 43% give firms a 4 or 5, 34% give a 3 and 14% give the lowest scores. Another 9% say they don't know.

Younger age groups rate firm sites' value more highly than older folks, as do those with smaller household incomes.

On the issue of ease of use, firm sites earn a mean score of 3.53 on a scale of 1 to 5, with 5 being easy to use and 1 being overly complicated. Overall, 47% give a 4 or 5, 33% give a 3 and 10% give the lowest scores. And 10% say they don't know.

Ease of use ratings vary according to age, income and portfolio size. Again, the under-40 crowd has the most positive assessment, compared with those 60-plus. Those with larger incomes and larger portfolios also find firm sites more accessible.

Client Online Activities, Online Intentions

Have done Likely to do Change
Read general financial news 70% 67% -3%
Research or read about stocks, bonds or mutual funds 72% 65% -7%
Buy or sell a stock, bond or fund 27% 41% +14%
Access investment account information 58% 64% +6%
Look at account information online while talking to your broker or planner on the phone 19% 40% +21%
Communicate with your broker or planner via e-mail 28% 45% +17%
Buy your broker's or planner's investment idea online 11% 16% +5%
Search for a broker or planner online 8% 11% +3%
Use a service that brings together different accounts on one Web page 24% 37% +13%
Participate in a financial-oriented chat forum 8% 14% +6%
Read or receive an investment newsletter online 47% 55% +8%
Pay bills online 30% 48% +18%
None of these 15% 14% -1%

Client Calculator Use, Now and Later

Have used Likely to use Change
Retirement planning calculator 35% 42% +7%
Asset allocation tools 18% 31% +13%
College funding estimators 18% 24% +6%
IRA calculators 20% 33% +13%
Mortgage analysis tools 35% 28% -7%
Tax calculators 32% 38% +6%
None 39% 35% -4%

Identifying the Clients

To participate, respondents had to have a full-service broker, a personal financial planner or both. In particular, 68% work with a broker and 43% have a planner, which means 11% have both.

In addition, the survey required respondents to have Internet access at one or more locations. At 90%, the majority has access at home, while 68% has access at work and 5% has access someplace else.

Almost 9 out of 10 participants are male. Regarding age distribution, 21% are under 40, 28% are 40 to 49, 30% are 50 to 59 and 21% are 60 or older. About 38% of the group has household income less than $100,000, 46% earns more than $100,000 and 16% refused to answer the question.

Respondents' portfolio sizes range from less than $50,000 to more than $1 million, but 28% would not reveal the amount and 2% didn't know. For the purposes of comparison, people are grouped by their portfolio sizes into those with less than $100,000 (34%) and those with more than $100,000 (36%).— J.S.

Playing Favorites

Clients definitely train their computer mice to frequent a few financial information Web sites. When asked to name their favorite URLs, several received repeated mentions. Yahoo! Finance is by far the most popular, and others rate highly as well. In alphabetical order, they include sites from:

Bloomberg, CNNfn, Fidelity Investments, Morningstar, MSN MoneyCentral, The Motley Fool, The Wall Street Journal and Quicken.


Methodology: A 16-question telephone survey of 200 investors was conducted in April by Beta Research, Syosset, N.Y. Names and telephone numbers were purchased from the Investors Masterfile maintained by Act One Lists, Marblehead, Mass.

Registered Representative welcomes your comments on this story. Contact Managing Editor Janis Samaripa at [email protected] or call our editorial department at 800/621-0720.

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