Many do-it-yourself investors are turning to financial professionals and other sources for advice because their approach of going it alone isn’t cutting it, according to a report by research and benchmarking firm Hearts & Wallets.
The DIY investor, the report found, has dipped five percentage points to 60% of U.S. households in one year and nine percentage points from its peak in 2015. The decline has brought the percentage of DIY investors to its lowest level since tracking by Hearts & Wallets began, the report noted.
The research, which included a survey of 5,993 participants last August and September, found that there is a growing need among investors to seek help with their finances. It said 26% of households, up three percentage points in one year and seven percentage points since 2010, prefer input from various sources. Also, 14% who rely primarily on financial professionals to make decisions for them has increased by two percentage points in one year but down six percentage points since 2010.
Investors consult an average of 6.4 different sources for information and advice, up from 4.6 in 2012, the report said. Following themselves at 91% and spouse/partner at 84%, the top source cited is financial professionals at 73%, a 10 percentage point increase from 2012. Family came in next with 64%, up seven percentage points; followed by a tie between online sources at 60%, which jumped 22 percentage points from 2012, and monthly or quarterly statements at 60%, which increased by 11 percentage points.
Other sources consulted include friends (53%), employer (50%) and media (47%). Employer-sponsored programs are tapped by half of households, up from 39% in 2012, the report said, noting that those programs are most influential with millennials.
One in five households cited financial professionals as the primary source of investment advice or information, while 49% use both online and financial professionals, the report said, adding that 81% of these households integrate online and live sources.
Noting that consumers can instantly access information and advice, Laura Varas, CEO and founder of Hearts & Wallets, in a statement said, “Firms can reinforce the strong relationships built between financial professionals and clients with service models that facilitate integration of online and financial professional channels to help clients that want to satisfy their need to blend sources.”
The report also found that younger and wealthier households are more likely to use both a financial professional and online for information and advice. Eighty percent of households under 45 with investable assets of $250,000 or more favor doing so. Also, two-thirds of households across all asset ranges use both compared to 31% of households age 65-plus, and more than half of households with $100,000-plus use both.