5 Factors Linked to Higher Investor Engagement
Imagine two investors. One investor reviews their investment goals every quarter and actively makes decisions. The second investor hasn’t reviewed their goals in over a year and doesn’t take part in any investment decisions. Are there traits that the first, more involved investor would be more likely to have?
In this graphic from Morningstar, we explore five factors that are associated with high investor engagement.
Influences on Investor Engagement
Morningstar scores their Investor Engagement Index from a low of zero to a high of 100, which indicates full engagement. In their survey, they discovered five traits that are tied to higher average engagement levels among investors.
FactorInvestor Engagement Index Score (Max = 100)
Financial advisor relationshipDon’t work with financial advisor: 63
Work with financial advisor: 70
Sustainability alignmentNo actions/alignment: 63
Some/full alignment: 74
Trust in AILow trust: 61
High trust: 74
Risk toleranceConservative: 62
Aggressive: 76
Comfort making investment decisionsLow comfort: 42
High comfort: 76
Morningstar’s Investor Engagement Index is equally weighted based on retail investors’ responses to seven questions: feeling informed about composition and performance of investments, frequency of investment portfolio review, involvement in investment decision-making, understanding of investment concepts and financial markets, frequency of goals review, clarity of investment strategy aligning to long-term goals, and frequency of engagement in financial education activities.
On average, people who work with financial advisors, have sustainability alignment, trust AI, and have a high risk tolerance are more engaged.
The starkest contrast was that people with high comfort making investment decisions have engagement levels that are nearly two times higher than those with low comfort. In fact, people with a high comfort level were significantly more likely to say they were knowledgeable about the composition and performance of their investments (84%) vs. those with low comfort (18%).
Personalizing Experiences Based on Engagement
Advisors can consider adjusting their approach depending on an investor’s engagement level. For example, if a client has an aggressive risk tolerance this may indicate the client is more engaged. Based on this, the advisor could check if the client would prefer more frequent portfolio reviews.
On the other hand, soft skills can play a key role for those who are less engaged. People with low comfort making investment decisions indicated that the top ways their financial advisor provides value is through optimizing for growth and risk management (62%), making them feel more secure about their financial future (38%), and offering peace of mind and relief from the stress of money management (30%).
Explore more survey insights for tips on how to use these engagement findings in client conversations.
Access to Paid Time Off by Wage Group in America
The U.S. is the only nation in the OECD without a federal paid time off mandate. We show how access to paid leave varies by income…
Charted: American Stock Ownership Back at All-Time Highs
Today, the share of Americans’ financial assets that are invested in public stocks is near all-time highs.
Charted: Growth in U.S. Real Wages, by Income Group (1979-2023)
Since 2019, low-paid workers’ real income spiked more than the last 40 years combined. Here are real wages over time, by income group.
Mapped: The Salary Needed to Buy a Home in 50 U.S. Cities in 2024
As the cost of home ownership nears record levels, we show the household income required to buy a median-priced home in 50 U.S. metro areas.
Mapped: The Income a Family Needs to Live Comfortably in Every U.S. State
Families in expensive states require over $270,000 annually to live comfortably.
The post 5 Factors Linked to Higher Investor Engagement appeared first on Visual Capitalist.