Investors who take financial advice are generally happier with their investments’ performance and have more confidence that they’ll meet their financial goals, according to findings published from Zurich’s Wealth Risk Report.
The study also shows that the vast majority of advisers are providing a tailored approach to their customers investment needs. More than 85% are having discussions about attitude to risk which either result in a separate risk profile for each of their customers’ investment goals or a discussion about how attitude to risk impacts on these goals.
The study questioned customers about the use of financial advice and how this impacted on their attitude towards risk and confidence in their investments’ performance.
Four different investor types have emerged from the study:
•Stags, opting for the highest risk option
•Bulls, willing to take high risk
•Owls, sticking to a low risk portfolio
•Squirrels, playing it safe
Nearly two thirds of ‘Bull’ investors, who benefit from financial advice, are pleased with the performance of their investments over the past year compared to just over half of Bulls who forgo the expertise of an adviser.
Likewise, 52% of Owls who take financial advice, are also confident that their investments will secure their financial goals compared to a smaller group of non-advised Owls (46%).
Interestingly, when it comes to their own investments, advisers show a much greater risk appetite. Nearly a third are Stags compared to just 8% of their customers; while just under half of advisers are Bulls compared to 29% of customers. No advisers fell into the most risk averse group Squirrels.
It also seems that when it comes to losing money, all types of investor were less likely to be very upset if they had taken financial advice, suggesting that it provides them with a better understanding of how investments can fluctuate in value, enabling them to reconcile a loss with the potential of gains in the future.
Commenting on the findings, Mark Peters, Zurich’s Head of Retail Wealth Propositions said:
“These findings highlight the importance of financial advice and the need for customers to focus on their different investment goals - we know that a one size fits all approach may not always deliver the best returns.
“It is encouraging to see advisers really drilling down to fully understand their customers’ investment needs through in depth discussion and a tailored approach.
“We believe we can build on this momentum helping advisers to work with their customers so that they fully understand risk - providing them with tools and easy to understand investment solutions.”
Zurich will be unveiling additional research findings over the coming weeks.
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