The Schroders report that this week revealed the unrealistic investment expectations of retail investors comes amid discussions about how the funds industry can more effectively help investors.
Schroders says there needs to be clearer information and better assistance for investors, following the release of its third Global Investment Trends survey, which found that investors expect returns of around 12% over the next 12 months, despite investing in low risk assets.
Carlo Trabattoni, Schroders head of pan-European intermediary business, says: “They expect to make that kind of money but their investment behaviour seem unrealistic. How can we help them achieve what they expect? This is down to more information and more assistance.”
Trabattoni says that fund providers and distributors need to work together to ensure that investment information is communicated to the end client in a clear, coherent and honest way. He says this could help to address what he sees as a large disconnect between investment behaviour and the returns investors expect to receive.
“I believe that it is right for the people to have higher expectations, but then they need to be able to translate them into reality,” he says.
In an active management debate at the Morningstar Investment Conference in London, Katherine Garrett-Cox, chief executive of Alliance Trust, said: “I think our industry has been very good at pushing product down the throats of hapless investors, without really taking the time to stand back and think long and hard about what customers actually need.”
She says Alliance Trust is keen to promote financial education at the provider level.
Helena Morrissey, chief executive officer of Newton Investment Management and chair of the Investment Association, also participated in the panel and said the possibility of complacency and being out of touch with people’s needs is the biggest risk for the funds industry.
“We do have to be very mindful of not just the need to be connecting with people to check we’re offering the right services, but also how we’re perceived,” she said.
Morrissey cited a survey carried out by professional services firm PwC in 2014, which found that fund managers were the least trusted of all financial services firms.
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