WHAT IS THE DEMOGRAPHIC & PSYCHOGRAPHIC PROFILE OF US INVESTORS INCLUDING CONSUMPTION HABITS OF US INVESTORS?

WHAT IS THE DEMOGRAPHIC & PSYCHOGRAPHIC PROFILE OF US INVESTORS INCLUDING CONSUMPTION HABITS OF US INVESTORS?

Based on a survey from the Brunswick Group LLP that mainly involved investors from the U.S., 98% of the investors surveyed refer to digital sources to do their research as they embark on their investment journey. Meanwhile, the 2018 National Financial Capability Study (NFCS) revealed that 46% of the investors surveyed said that “free online services, websites, and blogs” are the most referenced media for obtaining investment information. The rest of the media consumption habits of U.S. investors were presented in the section below.

  • Based on a survey from the Brunswick Group LLP that mainly involved investors from the U.S., 98% of the investors surveyed refer to digital sources to do their research when undertaking an investment procedure.
  • Around 88% of the investors mentioned that they base their investment decisions on insights that they obtained online.
  • Investors are also becoming more confident that the insights that they got online can be trusted.
  • Even if their trust level in online sources is not yet at par with the level given to leading financial publications, digital media is now almost at the same trust level as traditional content media.
  • As an example, investors’ trust in the information from search engines is now comparable to the one given to The New York Times, CNBC, and CNN.
  • Investment insights from LinkedIn, the leading professional networking site is more relied on than those from MSNBC, TechCrunch, and Politico.
  • Around 81% of the respondents trust the information that they got from Google when researching about their planned investment decisions. Around 63% of the respondents depend on LinkedIn for the same objective.
  • The rest of the information on the varying degree of trust of investors on various content is shown in the graphics below:

Trust in Platforms and Media

  • With regard to the use of digital media, around 74% rely on digital media to be updated with news about market dynamics.
  • Around 73% depend on digital media to know more about a particular segment. The rest of the data points on investors’ use of digital media is shown in the graph below:

Use of Digital Media Over Time

  • Another survey from Public and Finimize revealed that 26% of investors get insights from online communities and forums.

  • Meanwhile, the 2018 National Financial Capability Study (NFCS) conducted by the FINRA Foundation revealed that 46% of the investors surveyed mentioned that “free online services, websites, and blogs” are the most referenced media for obtaining investment insights. The breakdown of the rest of the media sources of the investors for investment information is as follows: “newspapers, magazines, and books” (42%); brochures or newsletters (30%); television or radio programs (29%); social media (17%); and investing sites such as BrokerCheck (7%) or Investor.gov (9%).
  • Based on the demographic profile of U.S. investors from a previous research, American investors are more likely to be “male, white, older than 55 years old, college-educated, and have high household incomes.”
  • With regard to their psychographic profile, U.S. investors have a habit of referring to Yelp to check for online reviews. They are also interested in uncovering the most recent insights as they navigate through the turmoil caused by the COVID-19 crisis. They also seek more personalized financial advice to reach their goals.
  • Those who are 55 years old above are considered to be part of the boomers’ generation group.
  • Based on the Global Web Index survey involving U.S. and U.K. citizens, 42% of boomers prefer to rely on content from broadcast TV. The rest of their media consumption preferences were shown in the visualization below.
 

Boomers' Media Habits

 

Psychographic Profile: U.S. Investors

Most US investors tend to like companies that pursue climate solutions while they dislike trading using mobile or online platforms. They are interested in receiving more guidance especially during this pandemic and they have a habit of consulting review sites like Yelp. More details regarding their likes, dislikes, attitudes, interests, and habits are provided below.

Likes and Dislikes

  • Most US investors like to invest in individual stocks and mutual funds for their non-retirement accounts. Those who have a portfolio value of less than $50,000 like to invest more in individual stocks while those who have a portfolio value of more than $50,000 like to invest in mutual funds.
  • Those who have a portfolio value of less than $50,000 like to have a “less diverse mixture of investment vehicles” while those who have a portfolio value of more than $250,000 like to have a more diverse mixture of investment vehicles.
  • US investors like the portfolios of companies and funds that pursue solutions to climate issues since these companies have a potential stronger return.
  • Investors who are 55 years old or older and have a portfolio value of $250,000 or higher don’t like to use mobile apps that help them choose their investments. They also dislike trading using mobile or online platforms.

Attitudes

  • Investors do not “limit themselves to one single approach” when making investment decisions. Survey shows that when making investment decisions, 78% frequently based their decisions on their own research, “61% also let a professional choose their investments, and 65% discuss investment options with a professional before deciding themselves.” These methods are not mutually exclusive.
  • When it comes to their attitude on investing or financial risks, “nearly half of investors (49%) describe themselves as willing to take average risks in exchange for average returns. Less than a third (29%) say are willing to take above average risks, and 10% report being willing to take substantial risks in pursuit of substantial returns.”
  • Findings from a 2018 Investor Survey reveal that “a large majority of investors (85%) are aware of cryptocurrencies, but only a minority (18%) are considering investing in them, and even fewer are currently invested (12%).” Furthermore, only 2% of investors who are 55 years old or older invest in cryptocurrencies. They consider it to be an extremely risky investment.

Interests

  • According to the president of UBS Americas, “as investors navigate the COVID-19 crisis, they are seeking the latest insights and more tailored advice on how to achieve their financial goals.” They are basically interested in receiving more guidance as “the pandemic is causing many of them to rethink how they’ll fund their liquidity, longevity, and legacy needs.”
  • Male investors in the US have a preference for companies that are started by men.

Habits

  • Around three-quarters or 73% of US investors consult review sites such as Yelp or TripAdvisor.

Research Strategy

Publicly available data regarding the psychographic profile of US investors are limited. We have looked at various press releases, news articles, and relevant industry reports and publications and found that the data available are mainly focused on points that are related to investing. Since the demographic profile of US investors shows that they are male, white, older than 55 years old, college graduate and with a high household income, we decided to narrow down on the profile of male US investors but also found limited data regarding that.

Demographic Profile: U.S. Investors

According to the most recent research, US investors are more likely to be male, white, older than 55, college-educated, and have high household incomes. The complete information regarding the demographic profile of U.S. investors is provided below.

Gender

  • About 56% of US investors are male.
  • The number of men “who have non-retirement investments” has increased from 35% to 39% (2015 – 2018), while in women this number has remained at 25%.
  • As per investment frequency, “men tend to trade more frequently than women,” as 40% of men make four or more transactions per year, compared to 25% of women.
  • Women are more likely (64%) to ask a professional for choosing investments than men (58%). About 34% of men and 31% of women use an online tool that chooses investments for them, while 23% of men and 21% of women use a mobile app for this purpose.
  • Men (34%) are more likely than women (24%) to have a margin account.
  • About 12% of men are willing to take substantial financial risks expecting to earn substantial returns, compared to 7% of women.
  • Men (26%) are more likely than women (18%) to buy stocks in response to the market drop, and both genders are equally likely to sell when this occurs (7% and 6%, respectively).
  • Women represent 53% of workplace-only investors, while 38% of women are active investors.

Age

Ethnicity

  • The majority of US investors are White, representing 77% of investors.
  • The percentage of African-Americans “who have investments in non-retirement accounts has increased from 20% in 2015 to 26% in 2018.”
  • In 2017, approximately 67% of African-Americans who had “incomes of at least $50,000” were stock investors.
  • According to a 2014 Wells Fargo survey, 47% of Hispanics “would prefer to place money in no-risk savings accounts, rather than in stocks or various funds.”
  • As per the Financial Industry Regulatory Authority (FINRA) Foundation, “22% of blacks, 25% of Hispanics, 36% of whites, and 47% of Asians held taxable investment accounts.”
  • The portfolios of black and Hispanic degree-holding households represent only 2.4% of the equity market wealth.
  • According to a recent study, Asian American retirees and pre-retirees worry more than other ethnicities “about taking too much risk (69% vs. 44%) or making a poor investment decision (67% vs. 54%) within 15 years before or after retirement.” About 75% of pre-retirees worry “about taking too much investment risk.” This population also believes that “workers approaching retirement should reduce their investments in equities (64% vs. 53%)” and has more conservative investment goals, “aiming for their assets to ‘match the market’ (43% vs. 32% of the general population) rather than outperform the market (55% vs. 65%).”

Education

  • About 45% of US investors have graduated from college or higher.
  • About 86% of white households “headed by a college graduate owned stocks in some form in 2016.”
  • In a study where 61.1% of investors had graduation and above qualification, it was shown that education was not relevant when choosing a type of investment risk.

Income

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