Investors ditch ‘set and forget’ in favour of advice

The volatile market environment means investors have dropped their idea of ‘set and forget’ and are keen to receive trusted professional advice, according to Natixis Investment Managers.

In the firm’s Global Individual Investor Survey, which surveyed 8,500 investors globally, it said the current market state means index funds are no longer a reliable investment and investors have to consider other options.

More than two-thirds said recent inflation had highlighted the importance of professional advice to them. CPI inflation had peaked at 7.8 per cent in December 2022 but fallen to 7 per cent in the year to March 2023.

Meanwhile, interest rates are currently at 4.1 per cent and the Reserve Bank of Australia expects them to keep rising this year.

VIEW ALL

View all

Looking specifically at Australian investors, 60 per cent recognised index funds provide returns that are comparable to market and 55 per cent believe index funds would help to minimise losses.

“The constant upward trajectory of investment markets could make even the least experienced investors look smart by simply buying an index fund. Facing a more complicated world and more challenging investment landscape, investors are beginning to realise the true value of professional advice and set specific service expectations for their adviser,” it said.

“After a long run of double-digit returns, investors have high expectations for their portfolios, but many may not realise how much the world has changed. They want high returns, but they’re worried about volatility. They think they know about bonds but do not understand the impact that rising rates will have on their investments. They think they know where the risks lie, but they miss the big picture, which is all about achieving key financial goals.”

More than half of Australian investors (54 per cent) said inflation was their top investment concern and close to two thirds (63 per cent) said it is significantly impacting their ability to save for retirement. Almost half (48 per cent) believe they need to invest more to make up for inflation. 

After inflation, 48 per cent of Australian investors see a recession and rising interest rates as the biggest risks to their portfolio followed by market volatility (32 per cent). 

When asked whom they turned to for advice, 91 per cent said they trust their financial adviser and more so than their family and friends. Financial planning advice and retirement income planning are the most favoured areas to receive advice.

They most value financial planning advice (49 per cent), help in understanding investments (45 per cent), and understanding their unique situation (35 per cent). Consumers particularly value receiving personalised and tailored advice with 31 per cent wanting investments that reflect their personal values and 27 per cent want the adviser to listen to them and their needs.

Louise Watson, managing director and country head for Australia and New Zealand at Natixis IM, said: “Volatility and inflation are certainly impacting investors’ short-term outlook but longer-term they are more optimistic about returns and their capacity to save for retirement. Central to achieving their goals will be working with trusted financial advisers and the survey confirms that Australian investors hold their financial advisers in high regard.”