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Starting just a few years ago – after the financial crisis, and as social media usage picked up – investors became increasingly drawn to the Internet as a source of investment advice. This was due in large part to a massive loss of trust in major U.S. banks. Nearly 50 percent of investors now rely heavily on financial websites and blogs – ahead of financial newspapers, periodicals, and financial planners – for their investment information (see Figure 1.1).

Sources of Investment Advice

FIGURE 1.1 Sources of Investment Advice

Source: ING Direct USA's Sharebuilder Survey

It's clear that investors, especially younger ones, are actively engaged in the online world in other ways:

They're reallocating. According to a survey conducted by Cogent Research of 4,000 investors with more than $100,000 in investable assets, nearly 70 percent of wealthy investors have restructured their investments, started, or altered relationships with investment providers, based on content found through social media.

They're researching electronically. Just in the last few years, consumers have had more access to real-time information, from scrolling through Twitter on their smartphones to pulling out their iPad while at the gym. In fact, a Fidelity Investments survey found that two-thirds of the millionaires surveyed said they would like to use electronic media with their advisors. And young millionaires – those ages 44 and younger – are three times more likely than millionaires of all ages to select a financial professional through a website providing detailed information on advisors, according to Spectrem Group.

They're engaging online. Young millionaires are four times more likely to express interest in a blog or tweets from their advisor, and nearly six times more likely to say they'd like their advisor to be on Facebook. “The overall percentages of young investors wishing to connect with advisors via social media remain small, but the differences in attitudes between young millionaires and millionaires of all ages are striking,” Spectrem Group says.

Indeed, investor involvement with social media will play out profoundly in the years ahead, with serious implications for advisors who fail to take the trend seriously.

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