This article is by staff writer April Dykman.
My personal finance education began here at Get Rich Slowly. I went from owing more money than I had to being debt-free (although now I have a mortgage). And along the way, I learned about money on websites and blogs. I used Mint to get my spending aligned with my goals and to track debt repayment. I opened and started managing my husband’s and my Roth IRAs online too.
Basically, I did it all via the Internet, no human contact involved. That really worked for me, both because I’m a research-nerd and because, as a perfectionist, I wasn’t about to tell a soul that I had credit card debt. And even when I had the money to start putting toward retirement, I still didn’t get advice from an adviser because I didn’t think the amount I was investing was significant enough. I thought only people with real money hired advisers. Also, I just preferred to set up a target date fund and be done with it, rather than risk hearing a sales pitch or feeling pressured.
I guess when it comes to personal finance, I’m a Lone Wolf McQuade, if you will. (Sorry, I’ll stop now.)
But according to a new Gallup poll, I’m in the minority, at least for now. “Even as access to the Internet has become ubiquitous in the U.S. and data analytics is highly touted for use in finance, U.S. investors are more likely to have a dedicated financial adviser than to use a financial website to obtain advice on investing or planning for their retirement, 44 percent vs. 20 percent*,” writes Lydia Saad for Gallup.
Furthermore, 35 percent of investors use a financial advisory firm with an advice call center and 29 percent rely on a friend or family member. So using financial planning and investing websites comes in dead last. Shocking, I know!
And of course, it’s not like investors are getting advice from one and only one source.
“Overall, 79 percent of investors report using at least one of the four financial advice resources tested, while 21 percent don’t use any of the four,” writes Saad. “The largest percentage of investors — 40 percent — rely on just one source, but almost a third (30 percent) rely on two, 7 percent on three, and 2 percent on all four.” (Wait — 21 percent of investors polled don’t use any of those four sources for investing and finance information? I’d sure like to know more about that!)
Who’s afraid of online investing?
Not surprisingly, there’s a good reason why most investors are weary of the web even though everyone you know uses it for everything they do.
According to the Gallup poll, it’s investors with significantly more invested ($100,000 plus) and retirees who are most likely to use a financial adviser human. They have more money at stake, for one thing. Also, a lot of it is generational. Among non-retirees, 66 percent were somewhat or very comfortable investing and getting financial advice online, compared with just 35 percent of retirees.
Help! I need somebody…
At least for now, the majority of investors want advice from an expert to help them and give them advice.
“Despite lots of buzz about online financial tools that allow users to submit their portfolios to computer algorithms, most investors still feel more comfortable involving a human, whether in the form of a dedicated personal adviser or a financial advisory firm that gives them access to live counselors in a call center,” writes Saad.
But ideally, investors would use a combination of methods. “[This shouldn’t be an either-or situation,” she writes. “Investors who want the best of both worlds can probably get it by seeking a partnership with financial advisers who are tapping into the same powerful analysis tools being offered to consumers online. In fact, such a marriage of humans and computers could be a strong selling point for the financial services industry — bridging consumers’ reluctance to go it alone online with their desire for a human connection and the best possible performance for their investments.”
*Poll findings are based on a sample of U.S. investors with $10,000 or more in stocks, bonds, mutual funds, or in a self-directed IRA or 401(k).
So, readers, are you Team Human, Team Robot, or do you use a combination of the two? And if you prefer to go it alone online, would you change your mind if you had $100,000 invested or were near retirement?
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