Study: Investors looking for collaborative relationships with financial professionals

2016 Individual Investor Survey Whitepaper

Trapped between expectations for near double-digit returns and strong apprehensions about investing in persistently volatile markets, investors worldwide are of the opinion that professional financial advice is worth the fee, according to a new study from Natixis Global Asset Management. But even though they believe individuals who work with a financial professional are more likely to achieve their goals, investors have a clear vision of just what kind of advice they need.

Our firm’s fifth-annual Global Survey of Individual Investors offers a look inside the expectations of 7,100 investors in 22 countries in 2016. It offers a clear view into the challenges facing investors and the behaviors that may keep them from achieving their goals. The findings are published in a new whitepaper, “Help Wanted: How investor behavior is rewriting the job description for financial professionals.”

With our report we look at three key issues facing investors, and the implications for financial professionals.

  • Misinformation, confusion and conflicts abound. Inundated with market information, short-term performance numbers and proclamations about the right way to invest, individual investors are challenged to separate fact from fiction.
  • Retirement lacking clear definition. Individuals recognize they will need to assume greater responsibility for retirement funding, but they may not be setting their sights high enough.
  • Seeking help on their own terms. Individuals believe professional help is necessary, but they are looking for a collaborative relationship that goes beyond advice to help them become better informed and more confident investors.
Some unique findings
There were some interesting findings in this year’s survey, as 62% of investors who participated in the survey agreed that index funds and exchange traded funds (ETFs) are a cheaper way to invest, but 60% also believe they are less risky.

The findings suggest that many investors have expectations that don’t reflect a full understanding of the risks of index funds versus the benefits.

The survey found that:

  • 60% of investors think using index funds can help minimize investment losses
  • 61% believe index funds offer better diversification
  • 55% believe index funds provide access to the best investment opportunities in the market
“It is critical to understand the risks in your portfolio, so it’s troubling to see investors mistakenly assign benefits to index funds that they don’t actually have,” said John Hailer, CEO of Natixis Global Asset Management for the Americas and Asia. “Index funds have a place in portfolios, but their low cost seems to be providing a ‘halo effect’ that could blind-side investors during volatile markets.”

Professional investors see the role for passive investing differently. Recent surveys of both institutional investors and financial advisors by Natixis showed they preferred active strategies to take advantage of market movements, generate alpha and provide risk-adjusted returns, while viewing passive investing primarily as a way to save on management fees.

For more on the 2016 Global Survey of Individual Investors,
watch video.


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