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Young Investors: New Report Shows the Trading Tools They Want
Online trading is a reality for investors in 2012, but a new study published by Aite Group shows that a significant number of even the youngest of them, Gen X- and Millennial-generation traders, are seeking traditional banks and human advisors when making trades.
Nearly half of them, in fact.
"I think the number makes complete sense, in that there is this idea: a young person is actually seeking advice from experienced banks," said Michael Liersch, director of Behavioral Finance at Bank of America and Merrill Lynch. "You want to go create a relationship with somebody, even though you have all these online- and Internet-based tools out there."
With that in mind, let's take a deeper look at the numbers that Aite Group's new study show.
Next-Generation Numbers: Demand for Investment Dynamics
Polling more than 1,000 U.S. investors in late 2011 -- ages 32-46 for Gen Xers, and 21-31 when it comes to Generation Y/Millennials -- Aite Group focused on those who had more than $25,000 in investable assets.
Here are some of the highlights of what they found.
- Online Investment as Second Nature: One-third of the Gen Xers and Millennials said they traded online more than 25 times per year. Just about 70% said they traded online more than five times per year.
- Online Investing Only Part of the Picture: Only 20% of the young investors say that online brokerage firms are their primary investment tool, even though they may engage in some amount of online trading. This is an important point, says Liersch, who suggest that young investors "would go to a provider that gave them both the ability to interact with human beings and also to do everything online. And how I interpret that is: at their convenience."
- Online Tools Influence Choices: Some 44% of the young investors say they would shift from one bank to another to capitalize on the best online investment tools that they could find.
That last number may make some investment providers sit up and take notice. According to the report, that's exactly the space in which banks and investment firms will find new opportunities.
If banks expand what they've begun when it comes to online investment tools, and if they can keep up with the newest technology -- meaning mobile tools (particularly for the Gen Y investor) -- then the Aite experts suggest that banks are poised to retain and grow their share with young investors.
And one other takeaway: diversity of products looks to be a big part of the young-investment future. The Aite Group's study hints that may include non-traditional and foreign-exchange options.
If this is the case, then banks' go-forward strategies should take into account this big idea: Young investors are going to want it all.