8/6/2019 Securityhololders Source of Investments Information
1/4
609
Feature
A recent American study ound 61 per cent o adults now
look online or health inormation.1 In Australia, The Age
recently quoted fndings rom a survey which ound onein every fve Australians misuse prescription and over-the-
counter medications, oten thanks to inormation gathered
via the global search engine, Google.2 Compare that to
some 20 years ago, it was unthinkable to consider asking
anyone but a trusted medical proessional or such advice.
I we trust the quality o advice sourced rom the internet or
something as important as our health, do we also trust the
internet or other high-involvement decisions such as where and
how to invest our money?
The rapid development o web-based communication channelshas led to the rise o social media which, or better or worse, has
made even more unverifed inormation easily available.
To better understand how and where retail investors obtain their
investment inormation, Computershare recently surveyed 2,000
securityholders.3
Where do investors currently fnd investmentinormation?
More than one-third o respondents use a stockbroker to obtain
investment inormation via ace-to-ace meetings. With brokers
being the traditional source o investment inormation or
many retail investors, it isnt surprising that they come up as the
preerred channel. However, our research also ound that there
are other options or fnding investment inormation in this digital
age.
Our research ound investors were generally divided into three
categories. Weve called them:
the Old Schoolers (the users o traditional media such as
television, radio and print)
the Quick Pickers (the savvy internet and e-communications
users) and
the Squids (the multi-channel users who are open to social
media).
Understanding securityholderssources of informationBy Andrew McClintock, Manager, Client Solutions Group, Computershare
The Old Schoolers
This group uses traditional media (or example, TV, radio, print
media and paper-based company communications) to access
investment inormation. They represent almost 17 per cent o
total respondents.
All Old Schoolers have internet access either at home, at work
(or both) and use the internet or other purposes. So even
though they are active on the Internet, they simply preerred the
traditional mainstream media when making investment decisions.
It is important to note that among this group, more than 90 per
cent have concerns with sourcing investment inormation online,
with the key ones set out in Table 1.
Table 1: Key fndings Old Schoolers
Did not know where to fnd inormation online 28%
Concerned about the credibility o online inormation 25%
Concerned about security issues online 21%
Did not make investment decisions by themselves 17%
Other reasons: lack o time, need help to use the internet 9%
The Quick PickersThis group generally accesses investment inormation via websites
and online subscriptions, including online versions o newspapers,
magazines, newsletters, periodicals and blogs, which supply the
delivery mechanism or providing the most up-to-date inormation.
They represent the majority o respondents (74 per cent).
According to an online survey conducted by Forbes in 2008, 65
per cent o individual investors considered the internet their most
important source o investment inormation.This was an increase
o almost 29 per cent rom a similar survey in 2005.4
Although the securityholders in this group were amiliar withfnding investment inormation online, they had yet to expand
their sources to include social media sites. The main reasons or
8/6/2019 Securityhololders Source of Investments Information
2/4
Feature
610 Keeping good companies November 2010
not utilising social media to source investment inormation are set
out in Table 2.
Table 2: Key fndings Quick Pickers
Concerns about the credibility o inormation 36%
Not relevant or them 30%
Concerns about security issues 26%
Other reasons including time comsuming, privacy
issues, lack o awareness and did not consider social
media as the right channel
8%
Other reasons (eight per cent) include time consuming, privacy
issues, lack o awareness o social media as an investment
inormation source and did not consider social media as the rightchannel to fnd investment inormation.
When asked i they would be likely to use social media or
investment inormation in the next one to three years, only nine
per cent o the Quick Pickers said Yes and 23 per cent said
Maybe. The remaining 68 per cent believed they would not
be likely to use social media or investment inormation. While
this group may be web savvy, they remained unconvinced o the
credibility o the broader social media channels as a legitimate
source o investment advice.
The Squids
While the respondents in this group are in reality a subset o The
Quick Pickers, the dierence is that these respondents actively use
social media to access investment inormation, marking them as
the most resourceul, multi-channel users o the internet.
Social media is a relatively new orm o online communication
which acilitates content sharing and the exchange o ideas
among users in a community-style environment. Well-recognised
examples include Facebook and Twitter while popular investment
examples include HotCopper and Topstocks (in Australia) and
SeekingAlpha and TheMotleyFool (rom overseas).
Even though the use o social media has skyrocketed in the past fve
years (Facebook today has more than 500 million active users!5),
our research ound only eight per cent o overall respondents use
social media or investment inormation. Among that subset, 37 per
cent are active contributors on social media sites.
While 79 per cent o Fortune 100 companies have embraced
social media strategies6 to engage with their customers and use
it as a sales channel, other organisations are taking a wait-and-
see approach. Interestingly, our research indicates that over 75
per cent o social media users believed companies shouldhave a
presence in social media channels. We believe this is due to its keybenefts o immediate engagement, ease o use, and degree o
interactivity.
Many respondents (44 per cent) elt social media communication
channels should be used as needed, or by request only. This
suggests that companies need a clear strategy or sharing
inormation via this medium, rather than simply having apresence. A signifcant proportion (33 per cent) believed
social media should actively be used as a tool to communicate
investment advice to securityholders.
Further, 20 per cent o the Squids believed that social media
shouldnt be used by companies to communicate with
securityholders. This again may suggest a lingering doubt over
issues o securityholder privacy and risks o raud.
Figure 1: How should companies use social media to
communicate with securityholders?
Frequency o internet use or investment inormation
Table 3 shows how oten two groups o securityholders go online
to fnd investment inormation. The Squids are highly active on
the web with more than hal o them using it or investment
inormation every day. We suspect these are the day traders or
highly involved investors, constantly searching multiple sources or
all types o inormation on which to base their investment decisions.
Table 3: Frequency o internet use to fnd investment
inormation
Frequency The Squids The Quick Pickers
Daily 55% 39%
A ew times a week 22% 26%
Weekly 10% 11%
Less than once a week 13% 23%
The age correlation
We analysed the respondent groups o users by cross-dividingthem into our age groups: 25 years and below, 26 to 45 years,
46 to 65 years and 66 years and above.
As a tool tocommunicatewith securityholders
As needed orby request only
Never
Other
44%
33%20%
3%
8/6/2019 Securityhololders Source of Investments Information
3/4
611
A surprising act emerged which seemed to reute the widely held
belie that the elderly are less receptive to e-communications.7
It is the 66 years and above group which shows the highest
percentage o the Quick Pickers at 76 per cent. In act, theamount o traditional users in this age group is only three per cent
more than that in the supposedly more web savvy 25 years and
below group.
In contrast, the use o social media shows an obvious correlation
with age group the older the age group, the lower the
percentage o Squids. (See Figure 2.)
Figure 2: Investment information channel by age group
The trusted source
We asked the Quick Pickers and the Squids to rank their sources o
investment inormation in order o importance. Table 4 comparestheir ranking rom the most important to the least important.
Table 4: Sources of investment information
The Quick Pickers
(internet and
e-communications users)
The Squids
(Social media users)
1 Online news and
proessional inormation
services (or example AFR.
com.au, Forbes.com)
1 ASX website
2 Brokers website ande-news
2 Companys website ande-communications
3 ASX website 3 Online news and
proessional inormation
services (or example AFR.
com.au, Forbes.com)
4 Companys website and
e-communications
4 Brokers website and
e-news
5 Financial blogs (or
example, Seeking Alpha,
Motley Fool)
6 Investment orums (orexample, Aussie Stock
Forums, Hot Copper)
7 Social networks (or
example Facebook,
Twitter, Stock Twits)
8 Online webinars
The most interesting aspect o the results in Table 4 is that even
among social media users, social media sites were deemed less
trustworthy than proessional and established company-branded
sources.
However, there may be another way o looking at the fndings. I
an organisation takes ownership o its own social media strategy,
as opposed to an independent aggregator or third-party supplier,
it is likely that investors will embrace the medium and the benefts
it can provide. In addition, where a blog or website is rated
highly among other social media users, it is deemed to be more
trustworthy on the basis that eedback rom the community helps
the most benefcial or most useul sites become more popular.
With trust being the key concern, companies need to address
the credibility o inormation sources and build trust with their
stakeholders proactively. Stean Grae, the ounder o Mext
Consulting and author o Trust Me, has worked with global
Squids
Old Schoolers
Quick Pickers
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
25 and below
21%
18%
61%
66 and over
3%
21%
76%
46 65
7%
18%
75%
26 45
18%
11%
71%
The mature market
A surprising fnding o our study was that the largest market that is
sitting latent or companies to tap into, should they wish to use social
media, is the current 66 years and above age group. Companies
wishing to engage with this segment need to address the barriers
(credibility, relevance, security) and learn more about that groups
preerences and behaviours in order to engage with them eectively.
According to the Australian Governments Treasury report, over
the next 40 years, the proportion o the population over 65 years
old will almost double to around 25 per cent.8 This means the
current 25 years and below and part o the 26 to 46 years will
make up almost a quarter o the ageing population. Considering
they are among the highest users o social media right now, it is
possible that the use o social media will grow exponentially and
play a leading role in how investors source investment inormation
in the uture.
Companies should note this trend and consider including social
media as an additional communications vehicle or its key
stakeholder groups, such as customers and investors. The beneftso this include more engaged stakeholders that can be reached via
a cost-eective interaction channel.
8/6/2019 Securityhololders Source of Investments Information
4/4
Feature
612 Keeping good companies November 2010
companies including Nokia, AXA, HSBC and Deutsche Bank to
drive brand engagement and business growth by building trust.
According to Stean:
Organisations need to understand that trust is driven by six
distinct acets stability, development, relationship, benet,
competence and vision. Trust and credibility can be built by
understanding which o the trust acets is best built with which
medium and thereore which messaging.
With social media, companies have at their disposal another
channel to engage investors and customers.
The challenges ahead
It is clear that retail investors, like most consumer groups, have
diverse needs when seeking out trustworthy investment advice.
While some preer the more tangible, traditional investment
inormation sources, others preer online resources, most likely
due to the convenience and currency o inormation that the
internet delivers. The pervasive use o the internet is undeniable.
Thereore, we can draw similarities between general societal
attitudes towards using the internet to source inormation and the
trend in retail investors researching online.
In the world o social media, services such as Twitter enable
individuals and companies to get in touch with literally millions o
ollowers quickly, easily and almost immediately. Similarly, Facebook
and YouTube, which have millions o repeat visitors daily, providea user-riendly and cost-eective environment to communicate
with specic stakeholder groups where ideas and experiences are
shared. The challenge o these media is to remedy investor concerns
regarding the credibility and security o their messages.
So while proessional inormation services and company
websites are still the most preerred sources o inormation,
the rise in popularity and acceptance o social media among
consumers represents a signicant opportunity or companies.
In act, a recent survey by the Australian Investor Relations
Association (AIRA) ound one-th o those proessionals surveyed
(stockbroking analysts and institutional investors) had madeinvestment decisions which were infuenced by inormation rom
social media!9
Given the cost-saving potential or many large organisations in
moving away rom traditional mail, this may be reason enough to
test the waters with social media channels when communicating
with potential retail investors. In addition, the delivery potential o
the internet contributes to ostering good corporate governance
through immediacy o inormation, two-way engagement, greater
transparency o company inormation and better stakeholder
experience.
The nature o social media dictates that the ripple eect is well
and truly present in the online environment: 70 per cent o social
media users trust a site more when it is highly rated by other
users. Thus, companies could make use o this compounding
power to build credibility through user endorsement. On the
fipside, companies should be aware that any credibility issues
not managed well could also spread as quickly, to potentially
disastrous eect.
All that said, while our survey points to a growing trend in the
sourcing o investment inormation online, the question still remains
how trustworthy is the source? A group o doctors based at the
Princess Alexandra Hospital in Brisbane did some research where
they googled the symptoms o 26 cases.10 And as it turns out, the
web search came up with the right diagnosis in 15 o those cases.
That equates to 57.7 per cent accuracy, or to put it more succinctly,
hal truths. Now thats ood or thought or any investor.
To learn more about investor communications strategies, contact
Andrew McClintock at [email protected].
Notes
1 Pew Research Centre, 2009, 61% o American adults look online or
health inormation, www.pewinternet.org/Press-Releases/2009/The-
Social-Lie-o-Health-Inormation.aspx, [8 October 2010]
2 Whyte S, 2010, Patients warned o Dr Google, The Age,
26 September, www.theage.com.au/national/patients-warned-o-dr-
google-20100925-15rob.html [8 October 2010]
3 A total o 2,179 securityholders responded to the survey, a majority o
whom resided in Australia and New Zealand (97 per cent)4 Sacho M, 2009, Investors say Internet most important source o
Inormation, WebProNews, 26 January, www.webpronews.com/
topnews/2009/01/26/investors-say-internet-most-important-source-o-
inormation, [9 October 2010]
5 Facebook, 2010, Press Room, Facebook, http://www.acebook.com/
press/ino.php?statistics, [9 October 2010]
6 Bloch E, 2010, How are companies leveraging social media?.
FlowTown, 7 March, http://www.fowtown.com/blog/how-are-
companies-leveraging-social-media, [9 October 2010]
7 Computershare, 2009, Investor Research Factors Affecting
e-Communications Behaviour
8 Treasury, 2004, Australias Demographic Challenges, The Treasury,
Australian Government, http://demographics.treasury.gov.au/
content/_download/australias_demographic_challenges/html/adc-04.asp [8 October 2010]
9 Australian Investor Relations Association and Financial & Corporate
Relations, 2010, Investors reminded to veriy social media
inormation, joint media release, 20 September, http://aira.org.
au/images/stories/AIRA_PDFs/MEDIA_RELEASE_-_IR_SOCIAL_
MEDIA_20092010.pd [8 October 2010]
10 Tang H and Ng J, 2006, Googling or a diagnosisuse o Google as a
diagnostic aid: internet based study, British Medical Journal, Vol 333,
pp 11431145, http://www.bmj.com/content/333/7579/1143.ull.
pd?sid=88c3585-eac8-4552-a12b-be4603349 [8 October 2010]
Top Related