A majority of Americans who are highly engaged across many aspects of life also grab hold of the wheel when it comes to investing, according to a new study by Charles Schwab.
But a sizeable number of go-getters in life say they are not actively involved in their investment portfolio, revealing a dichotomy between how they engage in life and their behavior when it comes to investing.
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‘Today’s Engaged Investor: An Approach to Investing Borrowed from Life’ surveyed 1,000 Americans, aged between 25 years and 75 years with US$250,000 or more in investable assets, who express a significant degree of personal ownership in their everyday lives. The study found that a majority are also highly engaged in investing: nearly two-thirds (61%) are actively involved in their investment portfolios. A smaller but significant portion of those surveyed (39%) say they are not actively engaged in their portfolios.
"Whether a result of the financial crisis and the challenging, dynamic investing environment that followed or a symptom of the low levels of trust in the financial services industry, there is clearly a trend towards a greater degree of personal involvement in investing – even among those who may have taken a more back seat role in the past," said executive vice president and co-head of Schwab Investor Services, John Clendening.
"Among our own clients, we’ve seen an increased level of engagement, and with that, a greater sense of confidence and optimism about the future."
All 1,000 investors surveyed are active and engaged in their every day lives, according to Charles Schwab. Approximately 88% say it is important for parents to be active in their children’s education and schools, 74% think hard work is what makes this country great, and 67% conduct their own research on health concerns as well as seeing a doctor. When using the services of a professional like a home contractor, doctor or accountant, just 4% of these individuals prefer to let the professional make the decisions without their involvement.
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By GlobalData
Dichotomy in investing
While all survey respondents display similarly tenacious attitudes and behaviors in their lives, there are numerous differences between those who are engaged in investing and those who are not.
When looking specifically at the group that is less engaged in investing, the study reveals attitudes and behaviors that are inconsistent with this group’s general level of engagement in life. Three-quarters (76%) say they take charge in their lives and wouldn’t have it any other way, yet just one-third (33%) think it’s very important to be engaged with investing, and more than nine in 10 (94%) call themselves planners, but only 38% actually have a financial plan.
Buyer awareness
In contrast to their behaviour in other areas of their lives, the study reveals that both groups are less engaged in certain areas of investing, including how they interact with professionals. These discrepancies are more pronounced among the less engaged group.
"In our opinion, the financial services industry, especially traditional Wall Street brokerage firms, has made investing too complex, opaque, and inflexible, all of which we believe create roadblocks for engagement," said Clendening. "We’ve seen an influx of new clients who are increasingly engaged and demanding clarity, choice, and control across all areas of their lives. We’re squarely focused on serving these needs, and we encourage others firms to do a better job of delivering information, products and services on these terms to build investing engagement."
