NATIXIS 2/2
Paris, 24 September 2015
A new global survey from Natixis Global Asset Management finds that short-term decision- making based on emotion and short-term market movements tops the list of investor mistakes according to their financial advisors. The survey was conducted among 2,400 financial advisors worldwide, of which 150 are located in France. It was carried out in June and July 2015 across fourteen countries in Asia, Europe (United Kingdom, France, Germany, Italy, Spain, and Switzerland), the Americas and the Middle East.
In this volatile market context, French financial advisors identify the top five investor mistakes:
Making emotional investment decisions
Focusing on short-term market noise and changes
Failing to establish a long-term financial plan
Not setting clear financial goals
Not staying on course
To help investors avoid these mistakes, French advisors are turning to more innovative investment strategies. They are aware that traditional investment models no longer address the complexity and volatility of financial markets - 60% of French financial advisors believe the traditional 60/40 approach is outdated - and they see alternative strategies (arbitrage or flexible strategies), such as those linked to commodities, foreign exchange markets or real estate, as crucial to provide stability and strengthen the resilience of a portfolio. Half of French financial advisors already use alternative strategies for their wealthiest clients and 38% (the highest percentage in the world) for their less- affluent clients.
Furthermore, French advisors - like their international peers - are convinced that active management is the best way to address the challenges of a volatile market. It is considered more effective than passive management to counter short-term market fluctuations (according to 74% of advisors), generate alpha (89%) and maximise the return-to-risk ratio (67%).
'In a very volatile market context, active management actually helps optimise risk management, the key to a diversified and more resilient portfolio,' explains Christophe Point, Managing Director of Natixis Global Asset Management Distribution for France, French-speaking Switzerland and Monaco.
French financial advisors are also faced with significant demographic challenges. They have to meet the investment requirements of their current clients - in particular retirement issues for the most mature - while taking into account the emergence of new client groups with specific needs such as younger generations and women. These groups will represent 39% of their clients in 2018, according to French financial advisors.
Attracting new clients, especially younger ones, is a real growth opportunity for financial advisors. Eight out of ten French advisors believe it is now crucial to establish relationships with younger generations, even though they still expect only marginal growth of 10% in the number of millennial clients over the next three years.
'Younger generations are a particularly attractive target for financial advisors by virtue of their growth potential, but also because of their greater receptiveness to non-traditional and alternative investment strategies. Almost 70% of younger French investors polled say they are prepared to take more risk than last year and 61% say that they are investing in alternatives, Making it possible to explore a broader range of investment strategies in order to build portfolios that are more robust and better suited to the complexity of today's markets,' said Point.
French financial advisors are not concerned about the emergence of these new client groups: seven out of ten believe they already have the necessary tools to meet their investment needs.
Since the last Natixis Global Asset Management survey of financial advisors in 2014, the appearance of financial decision support software, often referred to as 'robo advice,' has raised questions about the future of the investment advisory industry. But far from being a threat, new technology is providing financial advisors with new opportunity. Only 25% of French financial advisors are worried that new technologies will make their business model, based on personal relationships, obsolete. More than 80% of them believe the main shortcoming of robo advisors is the lack of personalised advice, especially during periods of increased market volatility. Rather French financial advisors see such software as a way to reach new client groups, and 69% see robo advisors as an opportunity to demonstrate their added value to their clients.
Christophe Point concludes: 'The emergence of robo advisors is paradoxically strengthening the role of the financial advisor, who will therefore have to evolve from the role of investment advisor to investment coach. The challenge is to educate clients, teach them how to understand risk, help them free themselves from their emotions and short- term views, adopt a rational approach and set long-term goals. These factors represent an exceptional opportunity for financial advisors to demonstrate the value of their expertise.'
Commissioned by Natixis Global AM's research centre 'Durable Portfolio Construction®', this survey was conducted by Core Data Research (a London-based financial research company) on a global scale with 2,400 financial advisors in 14 countries in Asia, Europe, the Americas and the Middle East.
150 French advisors took part in the survey, of which 108 independent financial advisors, 15 financial advisors affiliated with a banking network or a financial institution, 12 financial advisors associated with an asset manager and 15 associated with a brokerage firm or securities company.
The online survey was carried out in June and July 2015. The full report is available at:
www.ngam.natixis.com/espacepresse
More information on: www.durableportfolios.com
Press contacts:
Samia Hadj Bérengère Savelli
Tel. +44 (0)203 405 4206 Tél +33 (0) 1 44 50 58 73
samia.hadj@ngam.natixis.com berengere.savelli@shan.fr
Natixis Global Asset Management ranks among the world's largest asset managers in terms of assets under management 1. Its associated management companies offer investment products designed to increase and protect the wealth and retirement assets of institutional and individual investors.
Its own distribution network enables it to offer products from its subsidiaries throughout the world. Natixis Global Asset Management brings together the expertise of multiple specialised investment managers based in Europe, the United States and Asia, to offer a wide spectrum of equity, fixed-income and alternative investment strategies. Headquartered in Paris and Boston, Natixis Global Asset Management's assets under management totalled €811.6 billion as of June 30, 20152. Natixis Global Asset Management is a subsidiary of Natixis.
1 Cerulli Quantitative Update: Global Markets 2015 ranks Natixis Global Asset Management, S.A. as the 17th largest asset manager in the world based on assets under management as of 31 December 2014. References to a fund's ranking, price or rating are no guarantee of its future results.
2 Source: Natixis Global Asset Management as of 30 June 2015.
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