Clients: So many investment products, so little understanding

Clients: So many investment products, so little understanding
Survey reveals investors confused by crush of options – and not sure what they are
MAY 07, 2012
Advisers must stay on top of the latest investment products because many investors say they're overwhelmed by investment choices and find many to be overly complex. In fact, a third of the investors who responded to a survey conducted in February by MFS Investment Management said they feel inundated by investment choices; 40% feel financial products are too complicated. “The industry has a lot of capabilities that we didn't have before and by that very nature, some of the investments are complicated,” said William Finnegan, senior managing director of global retail marketing for MFS. “Younger investors want to understand these products more.” Investors' bewilderment often starts with the product description, Mr. Finnegan said. For example, more than 60% of the respondents found a product described as a mutual fund that protect against rising inflation “extremely appealing.” However, when asked about “absolute return funds,” only 14% found them appealing, Mr. Finnegan said. Advisers can help investors by simplifying the concepts and explaining clearly how a product solves a problem and achieves a financial goal, he said. The survey also showed that about 81% of investors who responded said they expect their adviser to keep them up-to-date about new and innovative investment products. A quarter of the investors said their need for financial advice has increased in the past 12 months. The younger the investors, the more likely they were to need more information. About 34% of those aged 31 to 45, so-called Generation X, say their need for advice grew in the past year. About 45% of those who are younger than 31, known as Generation Y, acknowledged a greater need for professional advice, the survey showed. But be warned: more than a third of the surveyed investors – even more among younger people — believe the information they find on the Internet about investments is just as good as what they would get from a financial adviser. About half of Generation X investors believe information from the Internet is just as good and 57% of those from Generation Y have just as much faith in info from the Internet as they would from an adviser. Mr. Finnegan said advisers should be concerned about this finding, but says the good news is that almost all age groups say they have an increased need for advice. “My suggestion to advisers is to send them to reputable sites where they can learn more,” he said. “You can no longer assume that investors are not going to check, as almost all investors have become validators.” The survey, which was conducted in February, polled 974 investors.

Latest News

AssetMark's Talk Tracks AI gives advisors a script for client calls
AssetMark's Talk Tracks AI gives advisors a script for client calls

The new AI feature generates instant client portfolio talking points, slashing meeting prep time for advisors.

Behind the Great Wealth Transfer: Citizens bets on business owners
Behind the Great Wealth Transfer: Citizens bets on business owners

As Citizens expands its advisory footprint, the bank is also going after wealth trapped inside business ownership

Forbes and Shook pull the plug on rankings, events, in 2026
Forbes and Shook pull the plug on rankings, events, in 2026

The Forbes rankings are highly sought after by some advisors and firms for marketing purposes.

Advisor moves: Cresset enters Boca Raton with $4 billion UBS team addition
Advisor moves: Cresset enters Boca Raton with $4 billion UBS team addition

Meanwhile, an advisor tuck-in from Edward Jones expands Kestra's Washington, D.C.-area presence, and Janney deepens its Connecticut footprint with an experienced Wells Fargo advisor.

Kovack Financial Network launches private succession platform for advisors
Kovack Financial Network launches private succession platform for advisors

KFN Succession Center pairs advisors weighing retirement with buyers, as next-gen affordability keeps eroding industry-wide.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income