Investor confidence survey results: on which investors?
Investor confidence survey results are published by various analysts from time-to-time, as they try to determine the direction that investors might take a market over a given future period. For purposes of this article, investors are ‘ordinary folk’ like you and me – the type of person that our firm services as clients! As ‘ordinary folk’ we are bombarded on a daily basis with financial ‘information’: what is sometimes difficult to discern is whether the information is ‘economic’ or ‘market’ (or indeed market-related). So, as an investor, what do the nightly finance updates, the incessant radio news bulletins, the regular newspaper columns and the ‘noise’ from comments by work colleagues and friends, do to confidence in investment markets and in the investment process?
This is an important issue to keep in mind when reviewing markets and observing survey results: markets are more likely to be made by professional investors working in, or for, superannuation funds, endowment funds and asset manager houses (of the type through whom clients of this firm will see their funds invested).
The current status of confidence: and factors affecting it.
Our reading of the position (at the time of this revision to this article) is that investors are still cognisant of the events of the GFC and tend to respond to risk aversion assessments with a more conservative (defensive) outcome that we observed in the years prior to that event. Whilst his is understandable in those cases where near-retirement nest-eggs have been severely downsized, for those with a longer time horizon the volatility of the market is an event that should be ‘wired in’ to our thinking process around investing.
We are not advocating that substantial reductions in investment asset valuations should become an acceptable ‘norm’, but we are reaffirming that volatility is part of the investing process – and careful planning should ensure that most volatility can be dealt with over the term of a long-term strategy. Refer to our website article – “Perspective on Risk and Volatility” for additional discussion on this topic.)
Evidence that investor confidence is strengthening.
We are heartened by the level of enquiry about investment and wealth management issues generally that have been steadily increasing since early 2011 – and even more consistently since late-2013. As mentioned in an earlier article, these new investors are seeing the investment world from a different perspective: they are seeing growth in the value of their investments – and are more confident of their future prospect of financial independence (albeit aware of the relatively recent experiences of their investor peers who have endured the effects of the GFC).
The question posed was ‘how confident are investors?’: and the answer seems to be found in their relative experiences.
Advised Investors are the most confident, statistically speaking.
Industry Surveys show that –
- Investors who take financial advice from a professional planner are significantly more confident about their investment plans;
- Investors who take professional advice are about 5% p.a. better off than a self-guided investor with similar ‘wealth attributes’; and
- Investors who ‘engage’ with their financial planners, believe that they are more comfortable about their financial position than those who are less engaged.
Other surveys track investor confidence and perceptions: one such researcher is the Australian Investors Association.
Improve your confidence in investing: engage with Continuum Financial Planners’ team.
At Continuum Financial Planners Pty Ltd we engage in our client services seeking to ensure that strategies recommended for our clients are targeted in their best interest. Whilst measuring that outcome is done differently in various circumstances (sometimes it is about ‘financial understanding’; sometimes it is about ‘all round confidence’; and sometimes it is just about ‘the results’) we approach all of our client relationships under the mantra that – ‘we listen, we understand; and we have solutions’ that we deliver in ‘personalised, professional wealth management advice’.
Whatever it is that you, your family and friends are looking for by way of financial planning/ wealth management advice, we commend a look around our website (starting at our services offering) to the various services, strategies and general information that we provide to help you become more confident about the future of investing for your financial independence.
(This article was originally published in our February 2011 eNewsletter to clients: it has been updated and re-posted in May 2014; and further refreshed in December 2020)