Global Investor Study

Cry for help? Millennial investors signal the need for face-to-face investment help

Despite overestimating their own abilities to understand investing, investors are willing to learn more, potentially saving themselves from future financial pain.

12.09.2016

Younger investors are most inclined to turn to financial advisers for help, a new global study shows.

“Millennials”, those aged between 18 and 35, indicated they are more willing to take personal advice from an investment professional: 46% of millennial investors said they would like to improve their understanding of investments by speaking to a financial adviser, compared with 41% for investors aged 36 and over.

The findings are part of a major study involving 20,000 investors from 28 countries, each with at least the equivalent of €10,000 invested, that points to a strong desire to understand more about investments.

The Schroders Global Investor Study found around nine out of ten investors wanted to improve their investment knowledge. The findings come at a crucial time for world markets, and the potential returns that may follow, given increased global political uncertainty.

The research also found disparities across regions, with more Asian investors expressing a thirst for improved knowledge than European investors. By countries, in Europe the Dutch were least likely to want to learn and Italians were keenest.

Schroders Global Investors Study 2016 found:

  • 89% of investors globally want to learn more to help them understand their investments
  • 94% of millennials globally would like to improve their investment knowledge

Speaking to a financial adviser remains a popular choice among investors before making an investment decision

The desire to learn about investments should serve as comfort to policymakers. By improving their understanding of investments and speaking to an independent adviser before making a final decision, investors could be prevented from falling into a financial trap.

It is also particularly important given that the study also found many investors were overconfident of their own understanding of investments and had potentially unrealistic expectations in regards to their financial goals. This combination could mean they risk disappointment with meeting their future financial targets.

The 2016 study also found:

  • Only 13% of investors globally admit they have worse than average understanding of investment
  • 63% didn’t correctly identify what an investment manager or fund manager does
  • Investors, on average, would expect a 9.1% return on their investments annually

Why guidance is becoming more important

The 2008 credit crisis has turned the investment world on its head. For the best part of 20 years, investors had enjoyed unprecedented growth and investment returns.

We now live in a world of low interest rates, low growth and returns that are consequently lower than investors previously enjoyed.

It is a world where policymakers are running out of options to boost growth and yet investors, confident in their own understanding of investments, expect near double-digit returns on their investments.

Investors need a better understanding of their investments, which is why the investment management industry needs to be more open and do more to meet investors desire to learn.

Graphic: Globally, the % of investors wanting to learn more about their investments is high


Investment advisers need to engage

While there is a healthy desire for investors to self-learn - 42% would do their own research via independent financial websites – half (50%) would still speak to a financial adviser before making a final investment decision.

Perhaps surprisingly given how fast technology is advancing in the world of finance, millennials (those aged between 18 and 35) appear to be most willing to take advice from an investment professional: 46% of millennial investors said they would like to improve their understanding of investments by speaking to a financial adviser, compared with 41% for investors aged 36 and over.

When it actually comes to making an investment decisions, millennials were again more likely to speak to a financial adviser first with over half (51%) likely to want a human contact, compared with 49% among the 36 and over age group.

Despite technological advancements and the advent of “robo-advisers”, where websites ask questions about risk and goals before offering investment solutions, most investors still prefer to speak to an independent financial adviser before making their final investment decision.

Graphic: Half of investors still want to speak to a financial professional before making an investment decision

Sheila Nicoll, Head of Public Policy at Schroders, said: “There is clearly a need for affirmation ahead of making investment decisions, underlining the need for investment management firms and financial advisers.

“The world of investing can be daunting, and even more so now with the added complication of growing global political uncertainty. It is therefore essential that those in the know use their knowledge to those who need and want to know.”

For the full story and interactive infographic visit www.schroders.com/gis or download the full report below.

You can test your understanding of investments with our income IQ tool, which will reveal your behavioural biases and provide useful tips to empower you to make better investment decisions.