The gap in confidence between advisers and investors for both retirement prospects and equity investments has grown since March 2022, according to the bi-annual Embark Investor Confidence Barometer.
In the previous barometer, 34% of advisers surveyed were confident that the majority of their clients would meet their retirement goals, however this has fallen to 25%.
Between surveys, advised investors’ confidence in their ability to meet their retirement plans fell to 72% from 78%. Clearly, advisers have become more pessimistic about their clients’ retirement prospects at a much faster rate than their clients.
This is juxtaposed to equity investment confidence, with advisers significantly more bullish about equities than advised investors. In the previous Barometer, 57% of surveyed advisers expected a net rise in equities in 12 months from March 2022.
This figure fell to 47% looking ahead over a ten-year period. However, in this most recent survey, advisers have become significantly more bullish; 62% of those surveyed expected a net rise over the next 12 months, with this figure rising to 67% over a ten-year time frame.
Investors, in contrast, are much less bullish. Whilst in the previous survey 61% of advised investors expected a rise in equities in the next 12 months, just 40% felt the same this time around. Non-advised investors are even more bearish, with just 30% expecting a rise, down from last time’s 48%.
Communication
Previous surveys have suggested communication challenges as a reason for the disparity in confidence. Some advisers certainly agree with this suggestion, with 42% of those surveyed this time agreeing that difficulty communicating with some clients was the reason for the gap.
In reality, the picture appears more complex with 84% of advised investors surveyed saying they were satisfied with their adviser’s communication, with 51% saying that they were very satisfied.
Similarly, 85% of advised clients were satisfied with their adviser’s ability to understand their needs. This gap may indicate that although clients are satisfied, advisers may need to take a more structured approach to confirm their communications are understood.
There are also other factors; 40% of advisers surveyed said unrealistic client expectations on investment performance may be a reason for the confidence gap and 39% suggested it may be due to unrealistic client expectations on what financial advice can deliver.
Ranila Ravi-Burslem, intermediary distribution director at Embark, said: “It has been a challenging year for investors, but this is the time when the benefits of having an adviser come to the fore, and we see that clearly in these results. Advised clients have greater clarity on how much money they need to retire than unadvised investors, and they have greater confidence that they will achieve their retirement plans.
“Advised client investment confidence has also held up relatively better and, thanks to the experience of their advisers, advised clients are more likely to take advantage of the more reasonable stock valuations that current market corrections create. This is a testament to the work that advisers do to prepare their clients for market drawdowns and ensure they have the willpower to stay the course with their investments.”
