How Australians make investment decisions

Interactive Investor recently conducted Australia’s first ever in-depth survey into how Australians make investment decisions online and how they prefer to receive information relating to their investments. Carried out in conjunction with online market research firm Nine Rewards, the survey shows that two-thirds of Australians have investments.

For the IR industry, though, greater interest lies in the findings that demonstrate how the investor demographic is changing – and how communicating information to investors needs to change as a result.

1000 people, aged 18 to 65+ from all around the country, took part in the survey of how Australians receive investment information. It looked at influences on investment decisions, as well as how and when people act on the information.

Interactive Investor/Nine Rewards Investment Information Survey key results

• 43% of people make an investment decision based on advice from friends or family, followed by 26.9% who are influenced by the media and 24.9% who invest based on broker recommendations. Only the 55-64 age group prefers broker advice to other influences.
• 56.3% of respondents said they use a company website to research possible investments, while 55.4% use Google.
  • A cumulative 30.7% of people use some form of social media to research investments. That rises to 48.9% (cumulative) in the 18-24 age groups.
• 28.9% of people are open to receiving more information about investment advice and 22.8% are open to new share opportunities.
• 87.3% of respondents said email is their preferred means of receiving information (newsletters, updates, announcements) from companies. 43.8% like to receive that information through a company website.
• 36.4% of 18-24-year-olds would use an investor-information Smartphone app, compared to just 7.1% of 55-64-year-olds.
• Men are four times more likely than women to rely on their own research or knowledge when it comes to making an investment decision.

What the survey results mean for the IR industry The IR industry is dependent on effective communication, but the Interactive Investor survey shows that investors are increasingly preferring to receive information in new ways, as well as using digital channels to research possible investments.

Email continues to remain the preferred means of communication, but social media in the form of Facebook, Twitter, blogs, forums, videos, podcasts and even mobile apps are becoming increasingly popular, particularly amongst younger investors.

This suggests that for the IR industry to reach its required audience in the future, it has to adopt a greater willingness to embrace social media as a means of disseminating information.

As Susan Werkner, Interactive Investor Managing Director, puts it: ‘The survey offers definitive proof that investors – particularly young investors – are taking new approaches to how they receive information and how they act on it. The investor relations industry needs to embrace the use of technology to a greater degree in order to keep potential investors informed and engaged.’