I attended the Finovate show a couple weeks ago (kind of a DEMO for innovative financial technology companies) and the main theme throughout every presentation was social media. Practically every company had figured out a way to incorporate some kind of social media element (e.g. blogging, social networking, widgets) into their product, although some did it much better than others. For many of the products, the integration of social media made sense, but I have to admit that I was a little puzzled when a few of the personal investment tools started evangelizing their own social networks. Even though I am a social media junkie, I am very cautious about where I gather my investment advice (probably because I don’t have much money to actually invest with), so I tend to rely on the experts, namely my financial advisor and the guys at Barrons. Personally, I just don’t feel super confident about taking stock advice from Joe Schmoe and his smiley face avatar, but apparently I’m one of the few.
An April 2008 survey by Cogent Research found that US investors are highly engaged in social media, and their investment decisions are influenced accordingly. The study found that 25% of US online adults are engaged in social media specifically related to personal finance and investing. Furthermore, almost two-thirds of high-net-worth investors – defined as those with $100,000 or more in investable assets – claimed online peer-generated content about personal investing and finance has an influence on their financial purchasing behaviors and decisions. You can read more about the study on eMarketer.
This might spell confusion for the likes of Chuck (i.e. Charles Schwab), but it definitely helps clear up my Finovate puzzlement. I guess I’m going to have to start paying closer attention to those recommendations from Joe and his smiley face after all.