There is only one thing more prevalent than Covid-19 in today’s society – data. This prevalence, and the accelerating processes of digitalisation, reinforces the need for firms to master the asset. Hannah Wright writes

A new report from RefinitivThe Gold Standard: Redefining Investor Data Needs – has examined the evolution of data needs and digital expectations amongst investors, now and for the future.

The research, completed in September 2020, collates responses from 1,030 self-directed and advised mass affluent investors across nine countries: Australia, Canada, China, Hong Kong, Japan, Singapore, Switzerland, the UK and the US.

Amongst the findings are three overarching themes: growing appetite for data, increasing demand for alternative data, and the importance of filling the ESG data void.

Data appetite

The Covid-19 pandemic has triggered an increase in investor trading activity, particularly amongst millennials. Attributed to the persistent uncertainty in financial markets, 59% of active investors reported to have altered the frequency of their portfolio changes.

Amongst millennials, 44% accelerated their investing frequency during the market volatility, when compared with 22% of older generations. Despite these increases, 39% of investors do not feel equipped with the data and content to make investment decisions. Needs are rapidly changing amongst investors, advised and self-directed alike.

Joe Mrak, global head of wealth management at Refinitiv, described “the importance of trusted and accurate data” in the face of “unprecedented change”.

For investors, the availability of data and digital capabilities are of paramount importance if they are to capitalise on lucrative future investment opportunities and avoid potential risks.

The report advises: “Wealth management firms should reassess the channels and formats of the content delivered to optimize insights for the current market environment.”

Alternative data

Mrak continues: “Our research shows that investors across the board, whether self-directed or advisory clients, have a growing need for a more comprehensive data offering that spans traditional analysis and non-traditional alternative data.”

Whilst data is important, it is analytics that render the most power. The ability to make sense of the data will help give investors the edge on emerging opportunities, particularly within pharmaceuticals and healthcare, which dominate the focus of 66% of investors surveyed.

According to the research, most investors are data savvy: “Our study indicates mass affluent investors are adept at navigating multiple sources of insight to manage their portfolios, engaging with price performance and macroeconomic data, asset fundamentals, news and policy announcements.”

54% of investors surveyed believe news analytics would revolutionise the process of choosing future investments. Alternative data is already popular amongst investors exploring favoured sector opportunities. This will enable wealth management firms to enhance client loyalty.

Meanwhile, despite their prevalence across the industry, a third of those surveyed do not find webinars useful. In the current context of widespread remote working, providers must monitor and evaluate their content, user experience, expert commentary or data underpinning their webinars, which in the eyes of many, are falling short.

Whilst some investors want bitesize insights delivered through podcasts, webinars and videos, many deem this content level insufficient. Crucially, content must include powerful data-driven insights. Taking advantage of this demand, disruptive firms will introduce more non-traditional data sources offering valuable additional context for investment decisions.

ESG

According to the report, 2020 has been a year in which many individuals “have had their social consciences awakened by the humanitarian and economic impact of the pandemic”.

As a result of this, interest in ESG has mushroomed. 34% of investors are more interested in ESG investing than they were 6-12 months ago and amongst millennial investors, this figure rises to 61%.

However, the absence of high-quality data is particularly stark within ESG. Wealth providers must ensure that any data is “visually approachable and easy to understand” given both the novelty of ESG and the lack of universal standards for the increasingly popular theme.

Consequently, investors must be empowered with high quality data to screen out risky opportunities, or those engaging in greenwashing.

Mrak concludes: “The industry will need to continue advancing in critical areas such as ESG to empower investors to make decisions with confidence.”