More consumers are multi-sourcing their investment decisions, with financial professionals being most influential, but reliance on online and employer resources is also increasing, according to a new research report.
Saving and investing consumers today consult an average of 6.4 different sources of information and advice, up from 4.6 in 2012, Hearts & Wallets reports in “Advice & Technology: Behavioral Insights to Inform CapEx Decisions as Advice Sources Proliferate.”
After consumers themselves (myself at 91% and spouse/partner at 84%), financial professionals are the external source of information and advice with the greatest influence, with 73% of households citing some type of financial professional as a resource, up from 63% in 2012.
At the same time, consultation is also up for employer programs. Half (50%) of households today indicate they use employer-sponsored programs as a source—including 401(k) and 403(b) providers and their representatives—up from 40% in 2015. What’s more, 76% of households who rely on employer-sponsored programs today use these sources at least once a year, compared to 70% in 2015.
Workplace programs are most influential with Millennials; Gen X has pulled back notably in the use of workplace plans, while employer programs are significantly less important for Baby Boomers, the research notes.
Most households (60%) that use statements as a source of investment information and advice consult those statements monthly or quarterly; this is up from 47% of households in 2012.
Meanwhile, the use of online sources reached 60% of households, its highest level since tracking began in 2010. More than twice as many consumers today rely on online sources “usually” compared to a decade ago. Today, 84% of Gen Z relies on online resources, compared to 76% of Millennials, 68% of Gen X and 45% of Baby Boomers. However, online sources rarely serve as the primary one, the researchers note.
Half (49%) of all households use both online and financial pros as sources for investment information and advice. In addition, 81% of these households integrate online and live sources in ways like validating, monitoring, dividing accounts or double checking.
| Source of Information and Advice | 2022 | 2012 | % Increase |
| Financial Professional | 73% | 63% | +10 ppt |
| Family | 64% | 57% | +7 ppt |
| Online | 60% | 38% | +22 ppt |
| Statements | 60% | 47% | +13 ppt |
| Friends | 53% | 47% | +6 ppt |
| Employer | 50% | 39% | +11 ppt |
| Media | 47% | 43% | +4 ppt |
Source: Hearts & Wallets
Decline in DIY
The desire for more sources can be seen in how consumers categorize their preferred investment decision process. The preference for “self-direction” is at its lowest level since Hearts & Wallets tracking began, now totaling 60% of U.S. households, down 5 percentage points in one year and 9 percentage points from its peak in 2015. A growing number of households prefer “input from various sources,” or what Hearts & Wallets calls “general contracting,” now at 26% of households, up 3 percentage points in one year and up 7 percentage points since 2010. Another 14% of households are “delegators,” who “rely primarily on financial professionals to make decisions for me,” up 2 percentage points in one year and down 6 percentage points versus 2010.
“Financial services firms should beef up third-party content within the firm’s website and boost online services where appropriate to address the general contracting behavior,” emphasizes Beth Krettecos, Hearts & Wallets subject matter expert and coauthor of the report. “Recognize, also, that stated decision-making process can differ from behavior. Six in 10 DIYers say they use a fin pro, so firms should have strategies for fin pros to play a role across all decision-making processes, especially for customers who want to integrate both live and online sources.”
The report, which examines the use of advice and information sources, including financial professionals, employer-sponsored plans and technology, is based on a survey of 5,993 U.S. households in the latest wave (fielded Aug. 15–Sept. 15, 2022) of the Hearts & Wallets Investor Quantitative Database.
Virtual Education
Meanwhile, a separate report from Schwab Retirement Plan Services shows that worker attendance at educational sessions about 401(k) plans and other financial topics reached new heights in 2022, with virtual live and on-demand sessions driving the most participation.
Participant attendance was up by 5.4% year-over-year, with virtual live meetings accounting for 65% of attendance, while 28% of participants went to on-demand meetings and 7.4% attended in person.
More than 80% of the sessions that Schwab offered in 2022 took place virtually. Of the workers who attended Schwab’s education sessions last year, 65% chose to attend virtual live meetings instead of watching on-demand sessions, up from 57% in 2021. Workers started returning to onsite meetings too, as 7.4% chose this format in 2022, up from a far smaller 1% in 2021. Cancellations and reschedules were down by nearly 10% last year compared to 2021.
Participant confidence and actions following sessions show the effectiveness of the firm’s approach. More than half of participants took action following a 1:1 engagement after an event in 2022, up from 37% in 2021. One of the top actions they took was increasing their contribution to their 401(k), with 18% of participants doing so in 2022, up from 11% in 2021.
“As remote and hybrid work arrangements become permanent realities for many, it’s now easier for workers to integrate virtual education sessions into their schedules,” says Marci Stewart, Director, Communication Consulting and Participant Education for Schwab Workplace Financial Services. “At the same time, workers are also looking for more interpersonal opportunities to connect and learn, making virtual live and onsite in-person sessions good opportunities for employers to deliver that engagement.”
