Advisers more trusted than institutions
A majority of Australian investors said their financial adviser was the most trusted source when making investment decisions, while trust in financial institutions was relatively low.
That is one of the key findings from the 2017 Natixis Global Asset Management Individual Investor Survey, which found 93 per cent of investors said they trusted their financial adviser compared to 88 per cent worldwide, while 59 per cent trusted financial institutions, compared to 62 per cent globally.
Furthermore, Australians seemed to focus more on cost than their global counterparts, with over half (51 per cent) citing cost as a very important factor when choosing a financial adviser, compared to 40 per cent of global investors.
Unadvised Australians also worried about costs, with 47 per cent of Australian investors saying they were put off by cost, compared with 35 per cent of investors globally, while 34 per cent said the results were not worth the fee.
In terms of investment, Australian investors preferred safety over performance, yet they expected annual returns of 9.6 per cent above inflation, without taking on extra risk.
Natixis managing director, Kevin Haran, said: “Australian investors say that they expect annual returns of 9.6 per cent above inflation, which is a goal that would absolutely push them towards riskier assets, yet 81 per cent said they prefer safety over performance, which does seem like a contradiction”.
Over a quarter (27 per cent) said losses or fluctuations over a monthly period concerned them, when in fact, they need to focus on the long-term, Haran said.
Investors were not achieving true diversification and risk management through investment in alternatives in addition to bonds and stocks.
“Three-quarters (76 per cent) of Australian investors (compared with 70 per cent globally) say they are willing to invest in alternatives in order to diversify their portfolio and minimise risk, yet only 39 per cent actually do,” Haran said.
“Part of the reason may be that, as an industry, we haven’t explained alternatives well. There may be some misunderstanding about their role in portfolio construction.”
AUTHOR
Malavika Santhebennur
Recommended for you
With candidate retention a concern after a professional year, two large licensees have shared how they are structuring their programs to successfully ensure candidates are keen to remain beyond the year.
Evidentia Private has appointed PIMCO’s Haydn Scott as principal for private wealth solutions, focusing on asset consulting and private markets.
Financial advisers have been urged to consider the role they are using AT1 hybrids for in client portfolios when it comes to deciding on a suitable fixed income replacement, particularly for their retiree clients.
Private wealth manager Escala Partners has shared the difficult conversations that advisers need to have with their clients as strong sharemarkets prompt a portfolio rebalance.
