Man and Machines: New Charles Schwab Study Examines How Different Generations Approach the Use of Technology

Study finds no link between age and affinity for technology;

People still need people, across the generations

Tuesday, May 12, 2015 8:00 am PDT

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"We need to find a way to get this generation started on the path to investing, and that will require more than a pure technology-based approach."

SAN FRANCISCO--(BUSINESS WIRE)--Nine out of 10 Americans view technology as more of a life necessity than a distraction but a passion for people persists across the generations, according to a new study from Charles Schwab which finds that people from age 25-75 prefer to rely on a combination of both humans and technology when it comes to dealing with daily tasks and managing their money.

The Charles Schwab “Man and Machines” study asked more than 1,800 affluent consumers across four generations about their interaction preferences for finding answers and solving problems across a range of topics, and although technology won out over people, the result was close – just over half (54%) say they prefer to rely on technology while 46 percent still favor interactions with people they know or to whom they are referred. In examining viewpoints by generation, the study revealed some surprising differences and similarities, particularly when comparing Millennials and Gen-Xers, which suggest that age is not a defining factor in how people approach the use of technology.

A Generational Divide?

When asked to choose between relying on a financial advisor and a computer algorithm for managing their portfolios, two-thirds (66%) of all respondents say they still prefer the human touch, and Gen-Xers are just as likely as Millennials to prefer a portfolio based on a computer algorithm (40% versus only 30% of Boomers and 24% of Matures).

The study also found that Gen-Xers are in fact more plugged in than the Millennial generation when it comes to investing: they are more likely to rely on technology when trading stock and when creating or maintaining a financial plan. Millennials appear to be seeking alternatives to technology: they are more likely than any other generation to feel relief from leaving their devices at home when vacationing, and more likely to turn toward familiar sources like their parents instead of seeking answers online on financial matters.

“We’ve come to accept as fact that Millennials are hyper-focused on using technology and the Internet for all their needs, but it’s clearly more complicated than that,” said Naureen Hassan, Charles Schwab executive vice president and head of Schwab Intelligent PortfoliosTM, the new automated investment advisory service from Charles Schwab.

Hassan noted that, like other studies, Charles Schwab’s new research indicates that Millennials are far less likely to invest (62%) than Matures (87%), Boomers (79%) and Gen-Xers (72%), and far more likely to put their money in a savings account (38%) than Matures (13%), Boomers (21%) and Gen X (28%). “Retirement may seem far away, but starting early can have a significant impact down the road,” she emphasized. “We need to find a way to get this generation started on the path to investing, and that will require more than a pure technology-based approach.”

Common Ground between Millennials and Gen-X

The study also found that Millennials and Gen-Xers are more similar than commonly accepted and larger divisions are found between the two younger generations and their older counterparts, particularly when it comes to personal service:

  • Millennials and Gen-Xers are less willing to pay more for personal service (44% and 47%) than Boomers and Matures (55% and 56%)
  • Millennials and Gen-Xers are less likely to want to discuss investing strategies with a professional (49% and 48%) compared to Boomers and Matures (61% and 67%)
  • Millennials and Gen-Xers are more likely to prefer to automate investing decisions (51% and 52%) compared to Boomers and Matures (39% and 33%)

Reliance on Technology Has Limits for Everyone

Revealing a general acceptance and trust in technology when it comes to money, Charles Schwab’s study found that investors across all generations and asset levels trust that their money is safe when they manage accounts online (66%). However, there are clear signs that trust in online interactions can vary depending on the nature of the interaction. Although technology is the preferred mode for transactions like booking a flight (96%), getting directions (95%), researching a new car (91%), and planning a vacation (90%), respondents feel differently when it comes to more private matters. Across the generations, the vast majority say they prefer to interact in person when dealing with a health issue (80%) or finding a date (68%).

When it comes to investing, the human touch still appears to be crucial in certain situations, especially for Millennials and the ultra-high net worth. Findings that illustrate a preference for personal interaction when it comes to investing include:

  • Seventy-five percent of Millennials are more interested in talking with a professional advisor when their financial situation gets more complicated compared to 72 percent of Gen-Xers, 71 percent of Boomers and 64 percent of Matures
  • Sixty-four percent of Millennials are more interested in talking with a professional advisor when they have a significant life event like getting married, having a child or dealing with a death in the family compared to 60 percent of Gen-Xers, 60 percent of Boomers, and 53 percent of Matures
  • The ultra-high net worth ($1 million+) are least likely to prefer automated investing (39%) or a portfolio based on a computer algorithm (28%)

“What we’ve found in this study and in our interactions with investors over the years is that there isn’t a ‘one size fits all’ answer for how people want to invest or manage their money – they will likely always want a range of services that incorporate both technology and a human touch,” said Hassan, who also oversees client experience at Schwab and the firm’s wealth management capabilities. “That’s why at Charles Schwab we’ll continue to focus on offering a variety of wealth management services to give people choice and flexibility – whether that’s online automated investing, support from financial consultants in our branches, managed portfolio solutions that address a variety of investment goals and circumstances, or tools and resources to help people who want to go it alone.”

About the survey

The survey was conducted by Charles Schwab, one of the largest full-service investment services firms in the country with $2.53 trillion in total client assets, and Koski Research. The online survey was fielded between February 18 and 26 among 1,808 consumers. The margin of error for the total survey sample is 2.3 percentage points.

About Charles Schwab

At Charles Schwab, we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity. More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.

Disclosures

Schwab Intelligent Portfolios™ is made available through Schwab Wealth Investment Advisory, Inc. (“SWIA”), a registered investment advisor. Portfolio management services are provided by Charles Schwab Investment Advisory, Inc. (“CSIA”). SWIA and CSIA are affiliates of Charles Schwab & Co., Inc. (“Schwab”) and subsidiaries of The Charles Schwab Corporation.

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE:SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. Koski Research is not affiliated with the Charles Schwab Corporation or its affiliates. More information is available at www.schwab.com and www.aboutschwab.com.

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Contact:

Charles Schwab
Alison Wertheim, 415-667-0475
alison.wertheim@schwab.com

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