Ahead of a shifting financial landscape in 2019, Lansons Director Louise Ahuja has analysed investment companies’ reputations with ordinary investors and highlighted the key areas that firms will need to address this year.
Could 2019 be a turning point for investment management companies and how they engage with potential investors? Lansons’ latest findings illustrate that an investment management company’s reputation is now the main consideration for whether a retail investor chooses to invest with them or not (25% of investors said it was what mattered most to them, compared to 21% saying price and 16% saying professional or personal recommendation).
We know there are an array of issues facing investment firms in 2019, the biggest being continued uncertainty in stock markets. In our latest report, less than half (46%) of retail investors say they are confident in the performance of global stock markets over the next 12 months (compared to 54% who say they are not confident).
Interestingly this is not the case for everyone, as ETF investors answers were the opposite. They were the most positive with 81 per cent of ETF investors saying they do have confidence in global stock markets in 2019.
A no-deal Brexit has the biggest potential to impact the markets negatively over the next six months according to just over half (51%) of those with savings and investments. This was followed by trade wars between the US and China (33%) and the possibility of a General Election in the UK (22%).
But aside from market concerns, there are a host of bigger trends that I believe will also change the investment landscape in 2019 and for investment companies the key will be to understand the purpose of their organisation. Who are they targeting? And what is the best way to do this?
These retail investor statistics highlight that a good reputation is what matters most to people when considering which company or service to invest in, above price, service and recommendations. Increasingly investment companies are being asked what is their social purpose and objectives? All companies should know why their organisation exists and what it’s here to do.
Below are some of the trends that investment firms will need an answer for in 2019.
- Transparency and pay
Only last week the Government launched the pay ratio regulations. The new disclosures will mean that, for the first time, the UK’s biggest companies will have to disclose and explain every year their top bosses pay and the gap between that and their average worker. A hot topic for shareholder engagement.
- Are they doing good?
Ethical, Social, Governance (ESG) investing is now mainstream and only likely to increase. ‘What do companies do and how do they do it?’ will be the questions increasingly asked as investors want to understand where their money is being invested.
- Millennials come of investment age and they’re choosing online
The upper end of the millennial age group is now well into their 30s, a time when people traditionally start thinking more about investing for the future. How will they make their investment choices and where will they go for information?
When asked, which of the following information online sources, if any, do you use when making financial decisions? Millennial investors top choices were blogs and online commentary from professionals, journalists and public, compared to all other age groups of investors who picked dedicated money websites. When asked which of the following offline media sources they use when making financial decisions, millennials’ top answers were perhaps surprisingly the specialist ‘money’ TV and radio programmes, along with specialist financial magazines.
- Women and investing
In 2018 a number of investment management companies focused on gender disparities in investing, these included interesting initiatives such as L&G’s Future World Gender in Leadership fund or Fidelity’s Women & Money Innovation Lab. In 2019 many will continue to look at how to close the gap and engage with more women. Lansons’ own research reveals that there are gender differences in how women make financial choices and where they get their information. Women are twice as likely as men to consider personal recommendations when making investment choices (14% v 7%), and whilst both sexes said that dedicated financial or ‘money websites’ were their biggest source of financial information online, for offline media the top result for women were TV and radio money shows such as Money Box, whereas for men it was the money sections of national newspapers.
In 2019 investment companies will need to understand their investment audience: how they make investment decisions and where they go for information. But more than that, they will need to articulate better their own values and story and ensure it matches their reputation.
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