Investors are much more cautious than advisers when it comes to stock markets, data has shown.
More than three quarters of advisers think stock markets will rise in the next 12 months.
However, the Scottish Widows Investor Confidence Barometer found only 53 per cent of surveyed advised clients and just 43 per cent of surveyed non-advised investors agree.
Of those surveyed, 84 per cent of advisers thought equities will rise versus 66 per cent of advised clients and 61 per cent of non-advised investors.
The barometer also found inventors are concerned about inflation, with 62 per cent of advised and 63 per cent of non-advised believing it will remain an ongoing feature for the next few years.
This is a significant increase from May 2023, the last barometer, which found 47 per cent of advised and 48 per cent of non-advised investors believed inflation will remain an ongoing feature for the next two to three years.
The report went on to say investor confidence has been dented by geopolitical and economic uncertainty with 72 per cent of advised clients saying they had contacted their adviser to discuss market volatility in the past 12 months, a jump of more than 10 per cent on the last barometer.
Scottish Widows also found evidence to suggest investor pessimism has been damaging to returns, with 28 per cent of surveyed advised clients admitting they initiated an increase in cash holdings with their adviser.
Barry MacLennan, CEO of Embark Investments which administers the Scottish Widows Platform, said: “It’s understandable investor confidence has taken a knock given the current economic and geopolitical uncertainties. However, stock markets typically look through the gloom, so it can be damaging in the long run to take portfolio risk off the table due to short-term, negative news.
“With investors admitting that ‘taking too little risk’ has been one of their biggest mistakes, a key part of the adviser role is to keep their clients on track from a risk-reward perspective, by focusing on long-term outcomes.
“The benefits of behavioural coaching to advised clients are clear in these results, especially in the evidence that advised clients are more aware of emotional biases and the risks they may pose to investment decisions.”
tara.o'connor@ft.com
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