Understanding Investor’s Evolving Concerns

Investors are less confident making decisions on their own, but most see positive change when they receive help from an adviser, according to data from Principal.

By DJ Shaw

Principal Financial Group has published new data about investors’ worries in the current market environment, finding many are seeking guidance and support tailored to their career stage.  

The findings from Principal show a correlation between the availability of financial advisory resources and higher investor confidence. As the data shows, many investors have a lot of concerns and little confidence in their investments. Further, the investment process is an emotional experience filled with questions, the firm says.

The three top fears investors face are seeing their rate of return not keeping up with inflation (33%), navigating extended periods of investment losses (31%) and not knowing who to trust (29%).

With these concerns on their minds, investors don’t feel good about making investment decisions, with 84% who feel emotional, over 50% who feel uncomfortable and fewer than 30% who feel positive, the firm says. All this contributes to low confidence levels, with more than 75% of investors saying they would like help with selecting investment options.

Only three in 10 investors are comfortable making solo investment decisions. Investor’s rank “not confident” as their number one feeling, but the firm says this is a known issue to most investors and they want to make a positive change in their investment strategies going forward. Confidence levels increase dramatically, to 85.7%, when investors are offered support from a financial professional.

According to the data, many investors do not naturally connect their perceived need for financial advice to triggers such as a salary increase or sustained growth in savings levels. Instead, investors tend to cite major life milestones, such as reaching a certain age (46%) or experiencing a major life event (41%). More than three-quarters of investors are looking for help with investment options, contribution rates and when to retire. The vast majority (76%) want personalized advice.

Cost is the top reason investors don’t seek out professional financial advice, but what many young investors may not know is that their current retirement plan or employer may already offer built-in financial professional services—free of charge, the firm says. The average age an investor thinks they should seek financial advice is 35 years old, but Principal notes that building a relationship with younger retirement savers could contribute to healthier savings behaviors.