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Investor behaviour – What impacts your clients’ decisions?

Understanding personal behaviour and motivation when investing is important to help clients make the right decision. People who invest are faced with countless decisions about which investments to choose, each with unique risks and potential rewards attached. The Global Investor Survey 2019 recently explored the behaviours and attitudes of more than 25,000 people who invest from around the world. Overall, the results show that, against a backdrop of market turbulence, people’s expectations for income and returns are continuing to rise. Despite recognising that investment plans should be long term, the majority of investors alter their investments according to short-term market movements.

The findings in a nutshell

  • People lack confidence in exactly how much money they have invested/saved, and where it is.
  •  People are not satisfied with the performance of their investment(s).
  • Globally, there’s a clear need to be more patient with investments.
  • People have unrealistically high annual return (i.e. income and capital growth) expectations.
  • In times of market uncertainty, people make immediate changes to their risk profile.
  • There’s an expectation from people that investments will produce close to the income that they want.
  • There is a general home bias for investments, and people are split over the benefit of investing in emerging markets.

According to the Schroders forecast, the next decade is set to deliver returns that don’t match the expectations of investors. “People around the world identified a lack of information as one of the biggest barriers facing their investment control. Addressing this information gap could be the key to seizing control of your finances, and ensuring you are handling your investments in the best way”, the report concludes.

Financial Advisers play a key role in addressing the information gap, and the expressed intention of the FSCA to ensure that product packaging is far more user-friendly than in the past will hopefully assist us in this regard.

Click here to download the Global Investor Study.

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