Investors turn to financial advisers as appetite for income and risk increases
In the competitive world of wealth management, staying attuned to evolving investor sentiment is a prerequisite for success. Amid a sluggish global economy and market uncertainty, investors are increasingly seeking income and demonstrating a willingness to embrace risk. Avaloq recently surveyed 3,000 affluent to ultra-high net worth individuals across six European and Asian markets, shedding light on these shifts and the opportunities they present for wealth managers.
Growing appetite for risk
The survey, conducted with respondents in Germany, Switzerland, the UK, Hong Kong, Japan and Singapore, paints a clear picture of shifting investor attitudes. One of the most striking findings is that 27% of investors in 2023 now describe their investment approach as aggressive, compared to 20% in 2022. This increase in risk appetite is significant and suggests that investors are recognizing the need to accept higher risk to generate meaningful returns in today's challenging investment environment.
Emphasis on income generation
With lingering concerns around economic volatility, geopolitical tensions, energy crises and supply chain disruptions, investors are prioritizing income. Half of the investors surveyed cited additional income as a key driver for their investment decisions, and 43% mentioned retirement planning as a primary motivator. In Europe, the percentage of individuals investing for additional income has risen by 16 percentage points since 2022, underscoring the prevalence of this financial goal.
Shift towards professional advice
Investors are increasingly recognizing the value of professional guidance to help navigate an ever more complex financial landscape. The survey found that more than half (53%) of investors now consult industry professionals, such as financial advisers, when making their investment decisions. This marks a significant increase of 9 percentage points since 2022. Industry professionals have become the go-to source for investment advice, followed by news articles (cited by 46%, up 3 percentage points since 2022). In contrast, investors are less likely to rely on advice from friends and family, with just 33% seeking their input, compared to 35% in 2022.
Opportunities for wealth managers
Martin Greweldinger, Co-Chief Executive Officer of Avaloq, notes, “Investors' motivations have changed, and their desire for income as well as their increased appetite for risk are reflections of the new realities of risk and return profiles in this volatile economic environment. It is no surprise that investors are now increasingly seeking out financial advisers to deliver consistent and steady investment returns.”
For wealth managers and financial advisers, these shifts in investor behaviour present an opportunity to demonstrate their value by offering the expertise and guidance that investors strive for. To remain competitive and ensure that their products align with the changing preferences of their clients, wealth managers must invest in technology that not only offers a seamless user experience but also enables them to anticipate client needs and provide tailored investment solutions.
At Avaloq, we closely monitor investor sentiment in a changing world with our annual investor survey. This enables us to create products and services that better support firms and their clients along the entire wealth management value chain. Read more about the five dimensions of investor behaviour revealed by the Avaloq 2023 investor survey.
