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Advised investors gaining up to 25% performance over DIY investors

30 May 2019

Investors who seek financial advice are outperforming DIY investors by more than 25% a year, according to the latest Legg Mason Global Investment Survey. 

On average, advised investors achieved returns of nearly 7.5% in 2018, significantly above the 5.9% achieved by those who picked their own investments.

Legg Mason, which surveyed more than 1,000 investors, said the the gap in return was driven by significant differences in allocations over the past 12 months. Of those surveyed, DIY investors held nearly half of their savings (46.8%) in cash, compared to just under a third (29.7%) for those who sought guidance from an adviser, suggesting those going it alone prefer a more cautious approach.

In contrast, advised investors showed a greater appetite for alternative investments, with 12.6% invested in assets such as commodities and hedge funds, compared to just 3% among DIY investors.

Alex Barry, head of UK distribution, Legg Mason, said the findings showed a “strong and clear correlation” between taking advice and higher returns.

He said: “We found that on average, people who tend to choose their own investments take less risk than those who take advice which can have a significant effect on returns. What our results show is that there is no substitute for expert knowledge when it comes to investing.

“A good adviser will take a considered view on higher-risk investments and search for higher returns in areas that perhaps most DIY investors wouldn’t.”

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