08 Jun Aussies are slow with technology
We ask Pete Wargent to explain why Australian investors are the least willing to embrace new technology when searching for an investment.
Kevin: When it comes to investing, Australians apparently are the least willing to embrace new technology. That’s according to a study that was done recently, admittedly overseas, but it was a global study, and they did actually highlight the fact that Australians are pretty much behind the 8-ball when it comes to using technology. I want to get a view on this from Pete Wargent from Allen Wargent Property Buyers.
Pete has clients from all over the world, so Pete, I guess you’d be fairly well across this. Would you agree with that assessment? And let’s look in detail at it.
Pete: Yes, sure, I think as a general rule, Australians are probably a little bit behind the curve on the idea of using technology in investing. Particularly Asia is leading the way, and then Americans, as well, but generally speaking, Australia is just lagging behind.
Kevin: Some of the results out of the survey, just to keep it in context: 4103 high-net-worth investors aged from 40 to 75, and 1267 high-net-worth investors aged between 30 and 39, so they spanned quite a lot of age groups, and they even went across 19 global markets to get these results. It showed that Australian investors trail behind their global counterparts, with only about 4% responding that they’re prepared to embrace technology. It’s pretty low when you compare it to some of the global averages of around 38%, Pete.
Pete: Yes, I think there are two aspects. One is geographic, and another one is related to age. You generally find that people under the age of 40 in Australia are a bit more open to the idea of using technology in investing, probably around a fifth, but for people aged over 40, then the numbers drop away very sharply to around 4%. I think to some extent, Australians are falling behind in this regard.
Kevin: Let’s have a look at it in terms of property and does it related to the property market? I guess a lot of us are reluctant to look outside of Australia for property investment opportunities.
Pete: It definitely does. I think technology in investing originally came to light with the idea of online brokerages, which really increased the frequency of trading and possibly led to shorter-term time horizons in investing, but we’ve spread now towards mobile investing, automated advice and even the use of apps and social media for the purchase of investments.
As it relates to property, though, I think we’re going to see some kind of digital disruption to the industry, perhaps undercutting of agents’ fees. Obviously, most people now look at online listings, but also for investors, there’s much more research that can be done online today, so looking at development approvals, flood maps, census data, and suburb data, and so on. There’s stacks of data that was just never available before.
But the fact that there’s more information, you still can’t remove that human element entirely, and I think some experience is important.
Kevin: You talk about digital disruption, and that’s something that we are experiencing, particularly in the Australian market right now with a lot of third-party sites offering to put you in touch with the best agent in your area, and then, of course, they’re getting a commission, as well. We have all these disruptions happening. What impact do you think that’s going to have on us as consumers?
Pete: I think there’s definitely a move towards cutting out middleman activity, and people are very much looking at a DIY approach to a lot of their investing. That can apply to property, too. I think we’ve seen that traditionally in Australia, Aussies have often favored a DIY approach. Self-managed super funds is a good example – extremely popular. But I think in general, Aussies should embrace technology, and that goes for investors and advisors.
Kevin: What about the countries overseas? I think the report highlighted the US and Asia as two of the countries that probably lead the way in terms of purchasing their investments online. You mentioned apps. Is that the only technology that we should be concerned about?
Pete: Apps are often used to purchase investments, particularly in Asia and America, but as I mentioned, online brokerages have been around for a long time. There’s the rise of automated or robo advice – so portfolio recommendations – that’ll become increasingly popular, but even just general social media – not just property listings, but chat forums, investor groups, and so on. There’s a very wide range of technology that could be embraced as it relates to investing.
Kevin: I guess it’s fairly important, too – and you mentioned this – that face-to-face relationship you can build up with advisors. The online world is really supplementary to that. You still need to get face-to-face.
Pete: I think so, though even there, technology is infiltrating and people are embracing Facetime, Skype, and so on, but as I mentioned, I think that as the automated advice industry becomes a bigger share of the pie, people will still want an element of human interaction and human experience.
Kevin: Good talking to you. Pete Wargent from Allen Wargent Property Buyers. Thanks for your insight into that issue, Pete. I appreciate your time.
Pete: Pleasure, Kevin.