Advisors rank third as investment resource for new investors

Survey finds that majority of investors who opened accounts in early 2020 are still going strong

Advisors rank third as investment resource for new investors

Considering that millions of new investors entered the market at the beginning of the pandemic, retail investment has undergone tremendous transformation, reveals a recent study. New platforms, financial products, and information sources have gained popularity as a result of the demographic changes brought about by these new investors.

A recent survey released in the fall of 2020 and conducted by the National Opinion Research Center at the University of Chicago and the Financial Industry Regulatory Authority Investor Education Foundation revealed that 79% of new and seasoned investors who opened accounts in the first quarter of that year are still active in the market, indicating a steady increase in the number of investors overall.

More new investors than experienced investors lacked the expertise to maintain their accounts, with 39% of new and 46% of experienced investors making deposits but no withdrawals. Investors didn't demonstrate any progress in their overall investing knowledge, but a five-item evaluation showed a little improvement in their comprehension of objective investing --- perhaps a result of experience-based learning.

A whopping 33% of novice investors—up 9% from 2020—cite financial experts when making investing decisions. Financial advisors placed third among nine sources in 2022, after annual reports/company websites and family/friends. In an earlier survey, financial professionals had ranked sixth among nine sources, while in 2022, this had jumped to third, albeit behind annual reports/company websites and family/friends.

The FINRA Foundation and NORC included questions about the digital engagement features of investing platforms to the study for 2022. Findings showed that 28% of novice investors and 22% of seasoned investors said they had cryptocurrency holdings.

Investors who own bitcoin have distinct demographics from those who do not. In comparison to non-Hispanic white investors, holders are younger, more often male than female, and far more likely to be Black or Hispanic.

Those who own cryptocurrencies have greater levels of subjective and objective cryptocurrency understanding, with 21% showing high knowledge levels vs 6% of those who don't own cryptocurrencies.