Investors turn to financial advisers as appetite for income and risk increases

New research reveals investors’ risk appetite has increased, with 27% of investors adopting an aggressive approach in 2023, compared to 20% in 2022. In today’s high inflation and high interest rate environment, income is investors’ top priority. Against this backdrop, more investors are turning to professionals when making investment decisions.

Investors are increasingly relying on industry professionals such as financial advisers when making investment decisions according to new research from Avaloq, a global leader in digital banking and wealth management technology.

The study, conducted among 3,000 investors across six European and Asian markets, found that more than half (53%) of investors consult industry professionals when making investment decisions, a figure that has risen by 9 percentage points since 2022. Professionals are the go-to source for investment advice, followed by news articles (cited by 46%, up 3 percentage points since 2022). Meanwhile, investors are less likely to look to their friends and family when deciding how and what to invest in, with just a third (33%) relying on them for advice (compared to 35% in 2022). 

The switch likely reflects the need for professional expertise, following a year of financial uncertainty, geopolitical tensions, energy crises and supply chain disruptions. Against this backdrop, investors cited additional income (50%) and retirement planning (43%) as the top factors driving them to invest. This was particularly notable among European investors, where the percentage of individuals investing for additional income (51%) has increased by 16 percentage points since 2022.

In a further sign that investor preferences are changing and demand for professional advice will increase, Avaloq’s survey revealed that a greater percentage of investors would now describe their investment approach as aggressive (27%) versus 2022 (20%). Meanwhile, the percentage of investors describing their investment approach as very conservative (12%) has dropped by 3 percentage points since 2022, a potential indication that investors’ appetite for risk is growing as they realize they need to take higher risks to generate meaningful returns in the current challenging investment environment.

Martin Greweldinger, Co-Chief Executive Officer of Avaloq, says: “Investors’ motivations have changed and their desire for income as well as their increased appetite for risk are reflections of the new realities of risk and return profiles in this volatile economic environment. It is no surprise that investors are now increasingly seeking out financial advisers to deliver consistent and steady investment returns.”

“As investor reliance on industry professionals increases, wealth managers and financial advisers have excellent opportunities to demonstrate their value. To remain competitive and ensure their products keep up with the changing preferences of clients, they must invest in technology that not only gives investors a seamless user experience, but enables managers to anticipate client needs and offer tailored investment solutions.”