Electronic or digital transactions are clearly threatening brick-and-mortar stores in all corners of the American economy. The ease of function, the speed of delivery, and the ability to stay in one’s pajamas all day make such online transactions more attractive than going out to buy virtually anything.
But the ease of use in buying groceries online does not extend entirely to making investment transactions online. Fear of computer hacks and security breaches make it more worrisome for investors to indulge in portfolio transactions the same way they might buy shoes.
“The growth of online and digital investment programs indicates that investors are willing to use Robo-advisors and other types of online services, but many probably do so with a level of concern about how safe those transactions are,’’ said Spectrem president George H. Walper Jr. “There appears to be no reduction in concern levels among investors, even as their participation in digital platforms continues to grow.”
Spectrem research shows that many investors believe a Robo-advisor can perform most investment tasks just as well as a human advisor. The question is whether concern over the security of financial information when using a digital service causes investors to avoid using Robo-advisors, or from performing other tasks online.
Spectrem’s new study Wealthy Investors and the Use of Digital Tools shows that less than half of all investors use social media for financial purposes, and of those that do not, the No. 1 reason for avoiding Facebook, Twitter and the like for financial functions is concern over the privacy of their key personal information (29 percent). It is possible that an investor pauses before hitting the send button on all sorts of financial transactions while they ponder the safety of their financial records and key numbers. Advisors who promote Robo-advisor services as part of a package for clients should consult with investors to determine if they are holding back because of cyber-security concerns.
Seventy-six percent of all investors with a net worth over $100,000 worry about the security of their financial information when they use social media platforms, even if they are not performing financial functions. That concern is probably elevated when they are submitting data related to their portfolio or banking and savings accounts.
The concern is not just about having financial information stolen. They also report concern that financial information can be destroyed. Which is why 60 percent of all investors save hard copies of all of their financial information and transactions. But that calls into question how much concern the other 40 percent have over the long-term safety of the financial information they have submitted online.
©2019 Spectrem Group