The study questioned customers about the use of financial advice and how this impacted on their attitude towards risk and confidence in their investments' performance.
As well as this valuable insight, the findings also helped to build understanding of the approach advisers are taking. The vast majority of advisers are providing a tailored approach to their customers' investments needs, with more than 85% having discussions about attitude to risk which either result in a separate risk profile for each of their customers' investment goals, or a discussion about how attitude to risk impacts on their goals.
Emerging investor types
Four different investor types have emerged:
Opting for the highest risk option
Willing to take high risk
Sticking to a low risk portfolio
Playing it safe
Nearly two thirds of 'Bull' investors, who benefit from financial advice, are pleased with the performance of their investments over the past year compared to just over half of Bulls who forgo the expertise of an adviser.
Likewise, 52% of Owls who take financial advice are also confident that their investments will secure their financial goals, compared to a smaller group of non-advised Owls (46%).
Interestingly, when it comes to their own investments, advisers show a much greater risk appetite. Nearly a third are Stags compared to just 8% of their customers; while just under half of advisers are Bulls compared to 29% of their customers. No advisers fell into the most risk averse group of Squirrels.
A better understanding
It also seems that when it comes to loss, all types of investor were less likely to be very upset if they had taken financial advice. This suggests the advice provides people with a better understanding of how investments can fluctuate in value, enabling them to reconcile a loss with the potential of gains in the future.
We believe the study illustrates the importance of financial advice and the need for customers to focus on their different investment goals. It is encouraging to see advisers drilling down to fully understand their customers' investment needs through in-depth discussion and a tailored approach.
Our range of tools and easy to understand investment solutions can help build on this momentum, to help advisers work with their customers so they fully understand risk.