Market sentiment is down and share trader retail investors are slightly keener to seek financial advice and education, according to the latest CMC Markets Share Trader Insights Survey.
The six-monthly survey of 500 Australian active retail share traders was conducted over two weeks in July 2010, and revealed a slight swing back towards financial advice as traders appeared to lose confidence in their own abilities. The percentage of traders who stated that they were totally self-directed fell from 78 per cent in January 2010 to 75 per cent six months later. The survey also showed that the proportion of advisers who predicted that they would not be self-directed at all in a year’s time increased from 5 per cent to 7 per cent, which analysts suggested indicated that more individuals would seek advice.
The survey showed that the levels of confidence in self-direction changed through the generations, with Generation X (30 to 44 years old) showing to be the most independent with 79 per cent currently self-directed, followed by baby boomers (75 per cent) and Gen-Y (72 per cent).
“Effectively, the baby boomers think an adviser can do a better job,” said business development director of researcher Retail Finance Intelligence Charles Green.
Green said issues such as the mining tax affected the survey responses, but even so he expected investor sentiment to worsen. The survey revealed that 33 per cent of the respondents will do nothing to their investments in the next six months, compared with 21 per cent who adopted this ‘wait-and-see’ approach in January 2010. The study also showed that the proportion of traders who intend to invest more money into equities has decreased from 44 per cent in January to 33 per cent in July.
Green said Retail Finance Intelligence had noted greater inflows into the market than outflows.
“At the moment they are still investing into the market, even though the All Ords is slipping down,” he said, although he added that Retail Finance Intelligence expected inflows to decline as a trend based on the sentiment outlook.
CMC Markets’ chief market analyst David Land said there would have to be a push beyond the 4600 mark on the ASX 200 before there would be a real shift in investor sentiment. He said volatility would remain for some time as the market continued to behave in what he described as a “quick-to-change and uncertain fashion”. Land added that there had been some aggressive responses to economic data, which he said investors tended to take to heart in a bearish phase.
Green said retail investors continued to lag behind professional investors, who were quicker to benefit from market upturns and quicker to get out in downturns. He said the respondents were aware of this, and perhaps that was why they were keener to seek out advice or further education. The survey showed that 80 per cent of respondents who defined themselves as not being self-directed believed investor-focused education would help them become more self-directed.
“The fact that 80 per cent want to be more educated about their investments shows that they are probably aware of [the lag] themselves,” said Green.
