David Eldreth: Investors are using their mobile devices to interact with their investment accounts more and more. Not surprising, right? How can we design mobile platforms to make them better investors? And how can advisors use this information to serve their clients better?

Hello, and welcome to Vanguard’s Investment Commentary podcast series. I’m Dave Eldreth. In this month’s episode, which we’re taping on July 8, 2019, we’ll explore how investors’ increased use of mobile devices are influencing their investment behavior.

Carrie Xu, a Ph.D. economist in research at Vanguard, is here to shed some light on some new research that has looked at how investors are using their mobile devices to engage with their investment accounts.

Hi, Carrie, thanks for joining us today.

Carrie Xu: Hi, David, glad to be here.

David Eldreth: So your research looked at how investors are using their mobile devices to engage with their investment accounts. Could you explain the origin of the study and what you looked at specifically?

Carrie XuCarrie Xu: Yes, sure. So, as we have all been witnessing, experiencing ourselves, the whole world is becoming more digital. We see lots of people shift their behavior from offline to online. So, for example, we shop online; we make new friends; and, you know, get in touch with old friends online; we look for jobs online. We even consume lots of media information online.

So, with that kind of background in mind, we are getting very interested in understanding how investor behavior has shifted from offline to online as well. So we’re interested to know how investors access their financial information at Vanguard through different digital channels.

We look at three different channels.

The first one is through a browser via a desktop or a laptop, so think of these as more stationary. You have a desktop/laptop in front of you and you go to your browser and log on to your Vanguard account.

The second channel is through a mobile browser, but now at this time you are using a laptop or a mobile device, so these are more mobile devices than stationary access.

And the last one is to look at Vanguard app users. So you download the Vanguard app and you log on to your Vanguard account via these apps.

So we look at these three different channels. We follow investors and see how their behavior has changed over a course of three years in terms of how they access their accounts via these channels.

David Eldreth: Okay, and what were some of your key findings? Could you summarize some of them for us?

Carrie Xu: Yes. So one key finding, perhaps not surprising to you, is that we see a growing trend of people becoming more mobile. They’re using more mobile devices. And while a desktop is still the dominant channel through which they interact with Vanguard financial information, we see a pretty high growth rate for mobile device usage. And such a high growth rate, maybe in the future, implies that mobile channel usage will dominate the desktop usage and it will become the most popularly used channel among investors.

So, just to give you an example. Among these retail investors that we look at, meaning investors who have a brokerage account, IRA account, or a 529, or such kind of retail account with us at Vanguard, we find that a tendency to use the mobile app actually increased by almost 20% yearly. And a tendency to use a mobile browser device through a tablet or a smart device has increased by about 10% yearly. So both are double-digit growth rates. And in comparison, desktop access has declined slightly, over a year, anywhere between 3% to 5% annually. So this is essentially our headline finding: that we’re seeing much more mobile device usage and a slight decline in the desktop access usage.

David Eldreth: And how is Vanguard using this data to enhance the user experience or alter the user experience for the clients?

Carrie Xu: Great question. Vanguard is using this research in many different ways. I can tell you I think the most important way is that this kind of research can inform Vanguard to think about its digital platform design. The quick growth rate of mobile channel usage really highlights the need of focusing on creating a better mobile experience for our clients for them to interact with us, for them to get educated on investment acumen, lots of different usages. And I think the complementary nature that I just highlighted between the desktop and mobile access can really help us understand the challenges some designers are facing.

So, for example, in our research, what we find is that app users, they tend to log on more frequently, meaning that they are more likely to go into their accounts and check using the Vanguard app. But once they log on, they don’t spend as much time as a typical desktop will use. So these app users only spend about 5 minutes per session that they log on while desktop users will spend about 13 minutes once they log on. So, thinking about the shorter attention span you have from these app users and how you can really design your mobile app to accommodate such kinds of short attention spans while still giving investors enough information that they’re looking for is something that challenges designers and something that Vanguard can use these data statistics to think about.

David Eldreth: So to what extent can the design of the mobile experience be used to encourage best investing practices like patience or maintaining a long-term perspective?

Carrie Xu: Yes. So let me give you an example. When the market is going up, we see investors are more likely to engage with their financial information. They’re more likely to log on to their account and check for investment information.

However, when the market is going down, investors are less likely to check their financial information, not paying attention to where the market is going at all. This is actually not very helpful because you actually want information whether the market is going up or going down to help you be a better decision-maker.

Similarly, for market up-times, if investors are checking their accounts very frequently, that might also show a kind of impatience or maybe risk-seeking behavior that might also not be good for long-term investment outcomes.

David Eldreth: So, if I’m an advisor and I can see how my clients are engaging with their investment accounts, how can I use that information to provide them with better service?

Carrie Xu: This is the beauty of digital channels. If you can observe your client information, their logon activity, behavior, you can help them in many ways. So tying into the ostrich effect I just talked about, if you see a down market and your clients are not checking with you, they’re not reaching out to you, they’re not checking their information on their online accounts, then that means they might have an ostrich effect; they’re burying their head down in the sand. You might want to reach out to them proactively and provide them with up-to-date market information, calm them down, and teach them how to go through the down market.

Similarly, if you’re in an up market and clients are fervently checking their account, calling you asking about a return, maybe they are too excited about their account. And that kind of behavior might make them less patient in terms of investment, and we know we want to encourage a long-term focus investment philosophy. So, as a financial advisor, you can help them, calm them down again, and educate them to become a long-term-focused investor not to be affected by market volatility so much.

If you can gather this information about client activity, their behavior, that will give you another way to improve your client/advisor relationship and also help them achieve more long-term success in a very meaningful way.

David Eldreth: It seems like the consumer is becoming more demanding of their digital experience because they’re doing more and more things, like shopping online and interacting with companies in a digital format. So it’s likely that their experience is not being compared to other financial services companies, but broadly, their best experiences. Maybe it’s Amazon, maybe it’s Apple, however they interact with other companies on the web.

Carrie Xu: Yes, I think Amazon, Google, they are very good examples of leading a digital way. Financial institutions are not at the level comparable to Amazon yet, but we are making our way to make investment more digital. But also, again, shopping is a different experience from investing. You can buy something. If you don’t like it, you can return it. Investing is much riskier and probably has more long-term consequences and probably broader consequences. It will affect not only you but maybe also your whole family.

David Eldreth: Okay. Let’s drill down into some of the data and talk about the differences that you saw. Did you see differences in, say, gender or age in how investors are using the platforms?

Carrie Xu: Yes, definitely, we do see a lot of differences based on demographic characteristics such as gender, age, asset level. Usually we observe that older investors are less likely to use mobile platforms. Very interestingly, once they adopted these mobile platforms, they don’t spend less time compared to younger generations. They spend just as much time as younger generations. So, once older clients pick up the digital channels, they are just as likely to spend time on digital channels as younger investors.

We also see pretty sharp gender differences. Males tend to use digital channels more than female investors. On average, males spend about 40% more time on digital channels than female investors. We also see some differences across clients with various asset levels. Typically, a higher asset level is related with the tendency to use mobile devices and also the duration that they linger on the mobile platforms.

David Eldreth: That’s a pretty startling difference between male and female investors, a 40% difference with male investors engaging with their investment accounts. Is that something that you need to dig more into to understand why that difference is there?

Carrie Xu: Yes, I think there’s a whole universe of research behind gender differences. And I think in terms of investing behavior, we don’t have a really good understanding of where this 40% difference is coming from. Is it the way that males and females are spending their time differently, are doing different activities online? Maybe they’re checking at different times of the week. Maybe weekdays we see more usage of one gender and on the weekend the reverse. These are all the detailed questions that we would love to explore more.

David Eldreth: What about affluence, the amount of investment assets that they have, was there a breakdown in more affluent investors and how they’re using the platforms versus maybe an investor who doesn’t have quite as much money?

Carrie Xu: Yes, we also look at investor behavior by the different assets they have with Vanguard. We typically find clients with higher asset levels are more likely to use mobile devices and they also spend more time on these mobile devices.

David Eldreth: Okay. And are they—or don’t we know this yet—are they using the mobile apps in a different way? Do they just use it to check their accounts, or do some of them use apps to make transactions, or do they reserve that more for the desktop platform?

Carrie Xu: Yes. So for this research, we look at a very high-level statistic. So we look at the frequency at which they log on to their accounts and we also look at the duration, or the time they spend after they log on to their accounts. So, we haven’t looked at the detailed level of what they’re actually doing online; but even at these high-level statistics, we do observe differences among desktop users versus mobile users. So, we see mobile app users, they log on more frequently for a shorter time. Desktop users log on less frequently but for a longer time. And that really goes back to your question about the implications we can draw from comparing and contrasting usage on desktop versus mobile channels.

David Eldreth: I see. It seems like the ability to check their investment account and making it easier for them to check it via the mobile devices, for some investors, could be counterintuitive in that they’re now in the cycle of always checking their account and maybe before they would just check every once in a while and had more of a long-term perspective. But now that they can check it so easily via the phone, they’re engaged with it more but not necessarily in a good way. What do you think of that theory?

Carrie Xu: I think that’s a great question, and it’s something that we ask ourselves always, all the time when we think about mobile platform design. I think your question really underscores the importance of taking a stance for investors, for investors’ overall success—not just to focus only on the ease of digital access so that people can get quick information, but also really to think about the consequence or the implication of quick, easy access for investors.

And this is something—you know, at Vanguard as a financial institution, we really care about how investors benefit from not only this quick, easy mobile access, but also how we can use these mobile platforms to reach investors to communicate with them the value of long-term-focused investment philosophy.

So that’s not easy, we know, but we are constantly pursuing ways to improve these overall investor outcomes; how we can trade off the balance between easy, quick access but also teach them to be more patient.

David Eldreth: So this paper is part of a series of research that we’re calling The Digital Investor. What can we expect going forward with the future research that you’re doing, and what are you going to be looking into down the road?

Carrie Xu: I think there’s a lot of research that we want to do. One of the big motivations for doing this research is trying to understand what kind of insights we can glean from data and research.

So that also guides our future research in this whole Digital Investor research series, which is that we want to provide more insights that financial institutions, advisors, investors can use to make better decisions. One topic of research down the road, as you asked earlier, could be that we can look at the various activities that people are doing. What are they doing at different market conditions and are these activities relating to any kind of investment success? Maybe people who check their account information more don’t tend to get a better investment return because they get into a very impatient status or they become too risk-seeking. Or maybe, you know, for female/male gender differences, there are more underlying fundamental reasons as to why we see such a gap.

So all of these will continue to evolve, as we dig into this research, so definitely stay tuned.

David Eldreth: Okay, great. Well, thank you for sharing your views and this research.

Carrie Xu: Why, thank you, David.

David Eldreth: And thank you for joining us for this Vanguard Investment Commentary podcast. Be sure to check back with us each month for more insights into the markets and investing. Thanks for listening.



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The research cited throughout this podcast is taken from the research paper The Digital Investor: Financial attention through multiple channels, available at

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