Natixis IM global survey reveals insights into investors' current concerns and the things they need most from their FAs
It’s a worrying time for many investors as a ‘huge market reset’ and an uncertain economic outlook make it harder to pick the right investments.
But despite concerns, most of the respondents (68%) to a survey across 23 countries by Natixis Investment Managers are optimistic about their finances today with just one third feeling negative.
The report highlights how, given what investors told the survey, optimism should not really be so high as some of their worst fears may be realised in the months ahead with economic slowdown and turbulent markets.
It warns that investors may not be fully prepared for the new economic landscape which has swung from low interest rates and low inflation to the opposite; or for the market changes that have changed from low risk-high return to higher risk for lower returns.
All this requires more help from wealth professionals rather than rely on passive investing, which the report notes has a key premise that investors have lost sight of: market returns at lower fees.
Just 63% of poll participants recognize that index funds provide returns that are comparable to the market and only 54% recognize that index funds are supposed to be less expensive.
Many investors just buy all securities within an index with 61% wrongly assuming that index funds are less risky than other investments.
Two thirds think index funds will help them minimize losses; and a similar share think they give them broad access to the best investing opportunities, whereas in reality it also exposes them to the worst.
That’s where you come in
For financial advisors (FAs), the time is absolutely right to be shouting loudly about how you can help investors navigate the tricky months ahead.
The survey reveals three key things that help FAs establish trust with their (potential) clients:
- financial planning advice (49%)
- help in understanding investment (45%)
- “understanding my unique situation” (35%)
This highlights the importance of a more personalized approach to financial advice.
The report concludes that many investors have come to expect high returns but may be unaware of just how much things have changed in recent years.
“They want high returns, but they’re worried about volatility. They think they know about bonds, but do not understand the impact that rising rates will have on their investments. They think they know where the risks lie, but they miss the big picture, which is all about achieving key financial goals,” the report states.
Fortunately, the research also suggests investors know how to get professional advice and are likely to need it in the next phase.
