Digital Investor Survey 2020

A Surprise Increase in Trust of Digital Sources Highlights Their Importance for Investors

Much ink has been spilled and many pixels stimulated with commentary on how digital and social media might be influencing politics, marketing, and culture.

But what about investors who move and make markets? How is their behavior changing? And how are those changes affecting big investment trends?

The headline stories in this year’s Brunswick Digital Investors Survey are about trust and source-accumulation, and the results may surprise you.

This year, Brunswick surveyed 422 senior investors from around the world, yielding an overall margin of error of ±4.8%. Fieldwork was conducted in October and November 2019.

Our respondents were divided* between the buy side (52%) and the sell side (48%). 68% are responsible for at least $100 million in assets under management and 25% look after at least $1 billion. 20% are in institutions that manage more than $100 billion. In terms of both size and quality of our sample, this year’s survey is the most robust we have ever conducted.

The topline finding is neither surprising nor newsworthy: 98% of investors use digital sources to investigate issues. But dig a little deeper, and there are four key findings that communications leaders and executives should consider in their investor engagement plans.

Key Finding #1: Investor trust in digital information sources increased meaningfully in 2019. 

With the considerable discussion about the role of digital and social media in society and the sharp criticism leveled at many of the major players about privacy and governance, we expected trust in virtually all media would decline.

We attribute some of this growth in trust to greater familiarity. As sources like podcasts are around longer, their audiences gain confidence in the quality of their reporting and analysis.

Instead, trust in financial podcasts to “give accurate and useful information for your work,” for example, grew by 1.4 points on our 10-point scale. That’s a 26% increase. Trust in other digital sources experienced similar gains. Trust in LinkedIn was up 16%, and trust in Wikipedia grew 13%.

We attribute some of this growth in trust to greater familiarity. As sources like podcasts are around longer, their audiences gain confidence in the quality of their reporting and analysis.

Key Finding #2: Investors are Accumulating Sources

It’s a truism in investing that quality and timeliness of information drives success. This year’s survey data demonstrates the degree to which investors will use the widest possible range of sources in their research and decision-making. Indeed, seven of the digital information sources we tested are now used by half or more of investors. These include obvious choices like search engines, go-to sources like blogs and Wikipedia, and emerging sources like podcasts and specialist e-mail newsletters.

Over the longer term, usage of LinkedIn to investigate an issue has grown 9 points since 2014, while use of blogs has increased 33 points, and use of Twitter is up 36 points. While platforms like Facebook, Instagram, and Slideshare have reached plateaus at much lower levels.

But the story remains clear. Taking into account other information sources like newspapers, broadcast news, online publishers, and e-mail, investors are accumulating and using dozens of sources that they find valuable.

This accumulation of sources makes sense when we dig into the reasons behind it. The top reason that investors use digital media is, predictably, straightforward information gathering, with 83% saying that they use digital sources to “gain a deeper understanding” and “keep up to date” with industries, issues, and companies they are tracking. 

But more than two-thirds – 68% – say explicitly that they are using digital sources to get beyond traditional media, to find new information, and to get it faster.

Investors’ accumulation of sources has important implications for businesses.

We have argued for several years that businesses who want to engage investors have an obligation to include digital and social media channels in their communications plans. And, to the extent that regulation – or the interpretation of it – might be acting as an obstacle to using digital effectively, the data demonstrates that those obstacles are actually making it more difficult for investors to gather the information that they need to make decisions.

Key Finding #3: Information from Digital Sources Fuels Real Buy / Sell Choices

Five years ago, only 41% of investors were using digital sources to make investment decisions. Today, fully 75% are doing so, an increase of 34 points.

Search engines and blogs remain the top sources for actionable information, but interestingly, podcasts and e-mail newsletters are now similarly significant.

When asked to name their most indispensable financially-focused blog, without prompting, 34% of the investors that used blogs to make their investment decisions mentioned Seeking Alpha, cementing its place a critical information source.

When it comes to podcasts, investors identified Bloomberg’s family of offerings as their favorites, but also mentioned Capital Allocations, Invest Like the Best, and Planet Money.

For the first time this year, we dug deeper into what specific actions investors take in response to information they receive or consume through digital and social media platforms.

On the buy-side, 31% said that they have decided to buy or sell a specific stock. 54% have discussed information from digital sources with analysts. And 32% have included it in an investment report.

On the sell-side, 30% have included information from digital sources in a framework of stock recommendations while 48% have written about it in an analyst report or discussed it with a fund manager.

Key Finding #4: Investors (Still) Want the C-Suite to be Online

Last year, data from the Digital Investor Survey showed that 49% of investors wanted to hear from a company’s CEO via digital. In our subsequent Connected Leadership report, we showed how CEOs who use digital channels effectively can have a significant positive impact with a wide range of key stakeholders.

This year’s data takes the story further. 38% of investors told us that they want to hear from a wider range of company leadership via digital channels, including the c-suite and board members wherever possible. This indicates that there is interest in hearing from a wide range of executives, not just the CEO or CFO. (22% of investors want to hear from other members of the C-Suite, such as the CFO or COO.)

We’ll have more on this in our next Connected Leadership report later in 2020, but the data confirm the importance of developing a digital profiling strategy for company leadership.

Actions: Ensure Digital is at the Heart of Investor Engagement

For business leaders, investor relations specialists, and communications professionals, there are three specific actions to consider in response to this year’s data.

  1. Ensure senior executives have appropriate digital profiles and use them to engage investors.
  2. Expand your digital playing field. Consider how you can include partnerships with podcasts, e-mail newsletters, and other emerging platforms in your plans.
  3. Consider digital reputation more holistically and take action accordingly.

As this year’s data clearly shows, the traditional focus on a handful of key media outlets is no longer an effective way to reach investors. Today, it’s imperative to go further.


Read the full report. 

Marshall Manson is a Brunswick Partner responsible for Brunswick’s digital specialism across Europe, the Middle East, Africa, and other key markets. He is based in London.

Noah Kristula-Green is an Associate in Brunswick Insight based in Washington, DC. He directed the development, fieldwork and analysis of the survey.

 

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