Nearly one in three investors who use online brokerages select their investments based on whether they use a particular product or company service, according to the 2006 Scottrade American Investor Study conducted by e-Rewards Market Research.
In addition, 28 percent of online investors select investments based on a company or product they have heard or read about.
The 2006 Scottrade American Investor Study, which polled 1,888 active investors who use either or both full service and online brokers, reports online investors have a voracious appetite for information. Seventy-two percent use online research to select their investments compared to just 43 percent for full service investors. Furthermore, 19 percent of online investors select investments based on recommendations from financial programs on television, compared to 12 percent of full service investors. Seventeen percent of online investors select investments based on recommendations from financial programs on radio, compared to just 5 percent of full service investors.
"Online investors use every option available to them, with more frequency, to make their own personal investment decisions," said Chris Moloney, Chief Marketing Officer at Scottrade, Inc., the online brokerage firm. "Brand awareness and corporate identity are very important factors influencing investment decisions."
Although 54 percent of investors get their financial news and information from financial Web sites, with more men (63 percent) than women (41 percent) using this resource, traditional media, especially newspapers, are key resources.
Where do investors get financial news and information about investing?
Financial Web Sites 54%
Local Newspapers 43%
Magazines 32%
Television 28%
Radio 11%
Media consumption by income also plays a role in how investors select investments. Scottrade found that 37 percent of investors with household income between $100,000 and $150,000 select investments based on recommendations from financial newspapers and magazines compared with 25 percent of investors with household incomes between $35,000 and $100,000. Investors with incomes over $150,000 are also more likely to seek news and information from financial Web sites, radio and magazines than lower household income investors.
"The abundance of financial news sources has made investing easier and less challenging." said Moloney. "For active traders, the efficiency of gathering news and getting it fast has made online trading faster than what most full-service brokers can offer."