Artificial intelligence (AI), environment, social and governance (ESG), diversity, equity and inclusion (DE&I) and transparency are now among the top considerations for investors, revealed a new global study.
The survey of more than 2,000 retail investors in the United States, Europe and Asia Pacific, the report from FleishmanHillard examines the communications trends shaping retail investor perceptions, along with the expectations of the global asset management industry amid market volatility and the rapidly changing landscape of how and from whom investors get investment information and advice.
TOP TRENDS IN THE UNITED STATES
Key findings for the US, show that:
- Despite a contentious political climate, more than three quarters (78%) of US investors cite DE&I policies and commitment as important considerations in selecting a financial advisor. More than two thirds (73%) expect clear and transparent ESG policies, goals and commitments to be public and accessible.
- Though the use of ChatGPT/AI may still be in its infancy for retail investors, some 60% of US investors say they have already used ChatGPT or AI tools for investment-related decisions.
- More than 90% of US investors select performance and credibility as driving factors in selecting a financial advisor, on par with transparency in communication and fees.
- For US investors, news and financial media are the most common sources for information on investment funds and products, outweighing even financial advisors and asset managers.
EUROPEAN PERSPECTIVE
Key findings for Europe show that:
- In Germany, France and the UK, investor appetite in the AI sector is high, attracting more interest than all other sectors. However, use of AI tools in investing lags, especially in the UK where just 28% of investors have used AI tools, lowest among all the markets surveyed.
- European investors place great importance in ESG considerations and are particularly wary of false claims or promises. Approximately three-quarters of European investors say they won’t invest in companies alleged to be engaged in greenwashing.
- Although over half of respondents in the UK say they manage their own investments, just 7% say that they are “very knowledgeable.”
- In contrast to their US counterparts, European investors are more likely to turn to financial advisors to inform their investment strategy, with brand/reputation and performance scoring as the most important factors in their choice of an asset manager.
TRENDS ACROSS ASIA PACIFIC
The findings across Asia Pacific, show that:
- Inflation/stagflation and geopolitical tensions are the biggest concerns among investors across the four Asia Pacificmarkets (China, Hong Kong, Singapore and South Korea) surveyed. Investors in South Korea and China are less likely than their Hong Kong and Singapore counterparts to reduce their risk appetite in response to business activities resuming after the COVID-19 pandemic.
- Nearly half of respondents across the Asia Pacific market turn to social media as a trusted source of financial information, higher than U.S. or European investors, while online platforms slightly edged out financial advisors and banks in most markets for sources for investment management.
- ESG considerations are on the rise across Asia Pacific with large majorities of investors in each market eschewing investment in companies that engage in greenwashing, are accused of violating human rights or fail to live up to their ESG commitments.
TRANSPARENCY, AUTHENTICITY & ACCESSIBILITY MATTER
“The asset management industry has been going through a period of unprecedented change,” said Thomas Laughran, Senior Vice President and Partner, Financial and Professional Services Practice Lead. “Markets have been buffeted by first the pandemic and then rising interest rate shocks. Cultural and regulatory shifts have focused greater attention on ESG, DE&I and how investments are marketed and deployed. Information sources and investment management options have proliferated as a result of technology and social media.”
Around the world, investor expectations of how, when, where and why they engage with investment and financial services’ providers are “continuously evolving” in this dynamic environment, added Laughran. “Amid the uncertainty, investors across the globe are increasingly seeking transparency, authenticity and accessibility in how the industry engages, informs and communicates with them.”
Click here to download The Future of Management: Global Report 2023 report.
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