Investors want more education from providers and advisers

The majority of inexperienced investors around the world do not feel confident in making investment decisions, according to a report by Schroders.

In its Global Investor Study 2022, Schroders found that 82% of the more experienced investors believe they have enough experience to empower them in making the right calls, however, this falls to 26% for those who see themselves as beginners in the investment space.

The report found that 51% of respondents want investment firms to take on more responsibility when it comes to educating investors, followed by 39% who would want financial advisers to ensure people have sufficient levels of knowledge.

A further 44% believe educational institutions have a role to play in teaching personal finance matters, while 24% think it should be up to the single individual to educate themselves.

Knowledge around investment topics was divisive in the study as well. The survey also revealed a surge in interest in both private and digital assets among those polled, with 47% feeling empowered enough to access both.

Yet, investors still perceive some of these assets as complex, especially for those within the infrastructure space, where clients were more likely to invest through a third-party product such as a mutual fund (41%) rather than directly (37%), and would want their providers and advisers to help them.

Need for support

Sheila Nicoll, Schroders’ head of public policy, added: “This year’s results reinforce the increased need to support people in informing themselves about investment, and engaging in their finances.

“This needs to be from earliest schooldays, throughout the education system, and during the course of changing circumstances in life.”

Georg Wunderlin, global head of private assets at Schroders Capital, said: “We’re seeing increasing interest from individual investors to build a holistic portfolio comprising private and public investments, as evidenced by our Global Investor Study.

“Next to diversification benefits, blended portfolios allow individual investors to overcome the illiquidity barrier which has prevented them from investing in private markets on a larger scale.”

Personal priorities

The call for greater knowledge also came in tandem with investors admitting they want their personal values ​​and principles to take greater importance when making investment decisions and setting out strategies.

This seems to be a growing need especially for the more ‘expert’ investors compared to respondents who classed themselves as ‘beginners’ or in the ‘rudimentary’ category.

Interestingly, the unification of investments with personal values ​​seems to be more prominent among older clients (76%) than younger groups (between 63-69%), Schroders found.

Investors feel they should have greater power to influence the companies they invest in as shareholders, regardless of their experience in the sector.

Climate issues were, unsurprisingly, the most important engagement priorities in most of the 33 countries encompassed in the study. Only Mexico, South Korea and Belgium ranked issues of natural capital and biodiversity higher than climate, proving that having a positive impact on the environment is incredibly high in investors’ agendas.

Close scrutiny

Stuart Podmore, Schroders’ investment propositions director, said: “This study demonstrates that perhaps now more than ever before, investors of all levels of experience are increasingly wanting to express their views if companies are unable to justify their actions.

“If the pandemic has taught us nothing else, it is that companies, as well as governments, are under closer scrutiny than ever to mitigate environmental, societal and governance risks in a sustainable way. What’s so interesting about our survey this year is that societal and governance risks are starting to rise up the list of priorities for investors.

“Increased investment knowledge appears to support people’s confidence in supporting corporate decision-making.”




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