Advised investors more optimistic – Dynamic Planner & Henley Business School
2 June 2020
Investors who seek financial advice are more optimistic about their financial situation through a market crash, new research from Dynamic Planner has shown.
A project carried out by the risk profiling group in partnership with Henley Business School found that when shown with hypothetical scenarios involving a financial crash and decline in their pension values, 58% of respondents who had experience of financial advice were concerned while 25% were still optimistic about their financial situation. A further 17% said they were not concerned.
In contrast, of those who had received no financial advice, 74% were concerned and only 12% felt optimistic.
The findings also revealed that those who had sought financial advice had a greater risk appetite. Nearly one in seven (13%) were in a medium-high risk level and 21% were in a low-medium risk level, while just 7% of those surveyed with no experience of financial advice were in a medium-high risk level and 43% in a low-medium risk level.
Louis Williams, head of psychology and behavioural insights, at Dynamic Planner, said: “The findings so far show that, generally, those who had worked alongside a financial planner were more resilient, had higher levels of positive emotions and self-esteem, were more confident in their abilities to manage their finances, more conscientious and emotionally stable, and were better able to regulate their emotions.”
While Williams said it might be the case that individuals with more “positive emotional attributes” may be more inclined to seek financial advice, rather than developing these qualities as a result of engaging with an adviser, the research demonstrated “important individual differences.”
Williams added: “When controlling for factors that may lead to seeking financial advice and having higher levels of these resilient characteristics, such as age and wealth, we continue to observe the emotional well-being benefits of having experience with a financial planner. Such qualities of stability and resilience are what we desire to promote and develop within all investors in order to face periods of adversity with confidence.”
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