Financial Planning Clients’ Investing Confidence & Knowledge

White paper from DataPoints

Financial psychology is at the heart of our product development and ongoing research here at DataPoints. Part of our research program includes examining investor-related characteristics. Our analyses include areas like confidence and composure. Our latest Client FinPsych Report explored the preferences, knowledge, and confidence of over 2,600 financial planning clients between February 2018 and May 2021. The results of this research help to identify areas where advisors can help clients’ improve investing-related decision-making. In other words, the results help to pinpoint where advisors can add “alpha” through guidance.

The findings demonstrate that advisors can help to empower clients, particularly the 80% of clients who report an average or less than average knowledge about the stock market. Our study also demonstrated that when it comes to preferring risk over a balanced or safe portfolio, only 31% of clients preferred a risky or very risky investment strategy. Just as in our Q1 report looking at investing attitudes, preferences, and other investing-related characteristics did not differ over time. Despite COVID, risk preference results are fairly similar year over year between 2018 and 2021.

Clients’ knowledge, preference, and comfort are dependent on their investing-related roles. Clients who report being responsible for investment decisions tend to be more knowledgeable and have higher numeracy levels than clients who report that the spouse is responsible for investing decisions. For advisors who want to ensure all household members are savvy investors, our results demonstrate some key areas to include in the client experience to make this a reality.

You can download the full report here.



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