Investors overestimate themselves

Private investors are too confident of their knowledge and are thus making mistakes when investing money. A new study from Schroders shows that global demand for financial advisory still exists.

The majority of private investors overestimate their knowledge on financial topics and therefore commits mistakes when investing their money, shows the Global Investor Study by Schroders. 51 percent of the global 20,000 surveyed private investors say they have above-average knowledge of the financial markets. Another 36 percent say that their skills would be "average". Nevertheless, 63 percent of respondents could not correctly describe what an asset management company is and what is does.

While consumers are increasingly responsible for their pensions, there is a big gap between the perceived knowledge and what investors actually know, says Schroders. Also, investors have unrealistic expectations, which can lead to subsequent deficits. "Investors tend to overestimate their knowledge of the financial markets," concludes Achim Küssner, Managing Director of the German subsidiary Schroders Investment Management. ”Thereby, they are running at the risk of not achieving their investment objectives.”

Although investors are convinced of their knowledge, they seek expert advice before making investment decisions. Despite the technological progress and the spread of automated investment advisory, they continue to prefer human contact. Half of the respondents want to include a financial advisor when making their next investment decision. According to Schroders, it is therefore still possible to interact with financial clients offline.

Moreover, the consumers are still open to further educate themselves about financial topics. Worldwide, 89 percent of investors want to learn more about investments. While talks with experts are still preferred, autodidactic approaches are gaining traction: 43 percent state that they would speak with a financial advisor to educate themselves; 42 percent says that they would do their own research on independent websites and 36 percent are using online tutorials for educational purposes.