Financial advisers across Europe need to work on improving their reputation

Increasingly more, advice from friends, family and colleagues is also becoming a common way to select an asset manager, research by Fundamental Media found

Key points:

• Most European end investors still choose their investments through their bank/financial institution or a professional adviser
• However, financial advisers are being perceived as too expensive by a large number of end investors in the UK, France and Germany, while Italian respondents most often cited having enough knowledge to manage their own investments
• When asked how involved they are in their investment decisions, slightly more than half of respondents indicated they review investment propositions suggested by their adviser and make the final decision themselves

European end investors mostly pick their investments through a financial institution or professional adviser, through their social network or after having gathered information through financial media, according to research by Fundamental Media. However, younger age groups rely increasingly less on financial advisers.

For our European end investor research, we surveyed 4,390 end investors across Germany, the UK, Italy and France. Questions focused on end investors’ views on various investment products, saving for retirement and ESG as well as their investing behaviour, how they pick their investments and their media usage.

Most European end investors chose their existing investments through their bank/financial institution (35%) or a professional adviser (32%). However, the channel preference varies significantly from country to country, with Italian end investors more likely to have used a professional adviser. Respondents also relied heavily on financial websites to help them decide, as well as advice from their friends, family and colleagues and articles in the media.

Of those that use a financial adviser, 29% indicated they believe their money will be better managed by a professional, which was the top reason given in each country surveyed. But we see that younger age groups are less inclined to use a financial advisor than the older age groups.

The main reason for not using a financial adviser was their cost, while others indicated they don’t trust advisers or had a bad experience in the past.

Financial advisers being too expensive was the top cited reason in the UK, France and Germany to not using a financial adviser, while Italian respondents most often cited having enough knowledge to manage their own investments.

When asked how involved they are in their investment decisions, 53% of respondents indicated they review investment propositions suggested by their adviser and make the final decision. Some contact their adviser if they hear about new investment products or have regular meetings/calls with their adviser to review their investments. Only 7% said they are not very involved and delegate most of their investment decisions to their adviser.

For European end investors, the most important factors when choosing to invest are security (51%) and the provision of steady returns (46%), although the findings differ significantly from country to country.

Our research found that an aggregate of 57% of European end investors are not currently investing in mutual funds. When asked why not, 24% said they prefer to pick stocks themselves. German and French respondents were much more likely to prefer picking stocks themselves, compared to their UK and Italian counterparts. The second most cited reason for not investing in mutual funds is the fees being too high.

Reasons for not investing in mutual funds vary by country and it is vital for asset managers to tailor their approach to the local differences. While Italian respondents were mainly concerned that the expected returns are too low, German end investors feel fees are too high and in the UK end investors believe mutual funds are too complex. Regulatory hurdles are mostly a concern for French investors.

To receive the full reports on our European end investor research, please get in touch with our research team on [email protected].