New global research has confirmed that the Federal Government's tinkering with superannuation and other investment options has spooked investors, persuading some of them not to act in their own best interests.
The research, undertaken within the State Street Centre for Applied Research, detected similar sentiments across a range of countries but said specifically of Australia that investors "are wary of the capacity for new and proposed regulations to effectively address underlying financial issues".
It said that, at the same time, investors "anticipate having to bear added costs stemming from that regulation".
Reflecting the manner in which regulatory uncertainty was spooking investors, the research said that retail and institutional investors were "exhibiting behaviour that appears to be at odds with their investment goals".
It cited the example of most retail investors believing preparing for retirement requires aggressive investing, but then leaving 31 per cent of their assets in cash.
"Retail investors' conservative strategies are cracking their retirement nest eggs," the study said.
"When retail investors were asked what steps needed to be taken over the next 10 years to retire, the majority said to invest more aggressively, yet cash is their number one allocation now and is expected to remain number one over the next decade."
The study found that investors' seemingly irrational behaviour was actually a rational response to a number of factors impacting the current global investment environment.
Amongst these it cited investors' "mistrust of their primary investment provider to act in their best interest, stemming in part from lack of value delivered versus fees charged".
It also cited "impediments from politics as well as new financial regulation that most believe will be ineffective and expensive".
