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Schroders launches ‘incomeIQ’ tool to help investors avoid ‘mental traps’ when investing

Schroders has launched a new online tool designed in partnership with University of Cambridge behavioural scientist and PhD researcher, Joe Gladstone, to help investors determine their unique behavioural biases when making income investment decisions and improve their income intelligence or ‘incomeIQ’.

28/09/2015

Schroders has launched a new online tool designed in partnership with University of Cambridge behavioural scientist and PhD researcher, Joe Gladstone, to help investors determine their unique behavioural biases when making income investment decisions and improve their income intelligence or ‘incomeIQ’.

Is the tendency to look on the bright side always a good thing? Do you buy more when you go to the supermarket hungry? As humans we’re not always logical or rational. Supported by in depth research on behavioural finance, the tool aims to help investors understand their individual profile in order to make more informed investment decisions.

In the current environment of low yields and with interest rates at near historic lows, traditional sources of income, such as bonds and bank account savings, have not offered returns that meet investors’ income goals. Whether to supplement pensions or paying for a child’s education, investors are looking to other sources of income but are they equipped with enough knowledge when choosing?

Our recent research shows that 88%1 of investors say they are on average or better than average at making investment decisions. People generally overestimate their investment ability and this ‘over confidence bias’ can cause errors in judgement.

Joe Gladstone, behavioural scientist and PhD researcher, University of Cambridge, England said:

“It is far more common for people to see themselves as above-average investors (41%) than as below average (12%)1. Psychologists have long found that people are biased to be overconfident about their abilities, resulting in unrealistic perceptions of risk. This overconfidence spills over into investment behaviour too. The result is impoverished returns as investors take bad bets because they fail to realise that they are at an informational disadvantage.”

James Cardew, Global Head of Marketing, Schroders commented:

Our clients and the Schroders Investment Trends Survey 20151 highlighted a knowledge gap when it comes to human nature, behavioural finance and how this can affect investors’ investment decisions.

As we see continued demand for income we want to ensure that investors are equipped with the knowledge they need. The incomeIQ tool and knowledge centre offers a hub for investors to explore their unique profile, along with guides and tips to help them make more informed decisions.”

To try the tool and build your incomeIQ visit www.incomeIQ.com

Notes to Editors

For trade press only. To view the latest press releases from Schroders visit: http://ir.schroders.com/media

Schroders plc

Schroders is a global asset management company with £309.9 billion (EUR 437.4 billion/$487.4 billion) under management as at 30 June 2015. Our clients are major financial institutions including pension funds, banks and insurance companies, local and public authorities, governments, charities, high net worth individuals and retail investors.

With one of the largest networks of offices of any dedicated asset management company, we operate from 37 offices in 27 countries across Europe, the Americas, Asia and the Middle East. Schroders has developed under stable ownership for over 200 years and long-term thinking governs our approach to investing, building client relationships and growing our business.

Further information about Schroders can be found at www.schroders.com.

Issued by Schroder Investment Management Ltd, which is authorised and regulated by the Financial Conduct Authority. For regular updates by e-mail please register online at www.schroders.com for our alerting service.

1 Schroders Investment Trends Survey 2015. View the results here.

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