Advised investors are more than three times as likely to feel ready for retirement

Put three basic financial literacy questions to investors who call themselves experts, and seven in ten will fail to answer all of them correctly. That finding comes from Amundi’s latest global survey of retail investors and savers.

The report also says a great deal about the work advisers do, because confidence and competence often travel separately. Retirement confidence in particular can mask a lack of real understanding: the clients who feel most assured may be the ones who need the most guidance.

Europe’s largest asset manager released the third edition of its Decoding Investors study on 23 September. The research asked 18,000 respondents in 26 countries about their goals, fears, behaviour and sources of information. Its central message is that retirement now dominates investor concerns. The skills and self-belief needed to fund it have not kept pace.

Retirement confidence

Investors now expect personal savings and investments to fund 42 per cent of their retirement, ahead of state provision and workplace pensions.

Across Asia, that expectation climbs above 50 per cent. The pattern will feel familiar in Australia, where the superannuation system has long shifted responsibility for retirement outcomes towards individuals.

Only 36 per cent of investors name retirement as a key reason to invest, including 34 per cent in Europe and 40 per cent in Asia. Among that group, just 23 per cent feel very confident about achieving long-term financial security. That figure has slipped from 26 per cent a year earlier.

Advice changes the picture markedly. Half of advised investors say they feel very confident about funding their retirement. Among those who have never accessed advice, the figure falls to 14 per cent.

The cost of caution

The intent to invest runs high. Some 43 per cent of savers expect to start investing within the next 12 months, and that rises to 62 per cent among 21 to 30-year-olds. Fear holds many back, however, with 39 per cent citing the risk of losing money.

Appetite varies widely from country to country. Danish savers lead at 79 per cent, followed by Singaporeans at 73 per cent. Belgians and Germans show the least interest, at 24 per cent each.

In practice, that hesitation often shows up as cash held long past the point of usefulness. A majority of savers (52 per cent) believe an emergency fund worth less than six months of income would cover unexpected costs. Most of them, according to the study, hold far more than that.

Fannie Wurtz, deputy general manager and head of clients group at Amundi, describes the core challenge as “helping more savers become investors and enter capital markets.” She sees the solution in trust and education.

“For our industry, this means strengthening trust, improving access to investor education notably through digital channels and offering simple, transparent and accessible solutions.”

Knowledge and self-belief

The literacy results make uncomfortable reading. Among respondents who describe themselves as experts, 70 per cent could not answer three basic financial literacy questions correctly. At the other end of the scale, one in four retail investors consider themselves beginners.

The mismatch grows sharper further up the wealth ladder. High-net-worth investors report the most confidence but post the lowest literacy rates, with only 36 per cent answering all three questions correctly. They are also the group most likely to use a professional adviser, at 87 per cent compared with 58 per cent of retail investors.

That combination carries a clear message for practices serving wealthier clients: retirement confidence and financial literacy do not move together. A client’s assurance reveals little about their understanding. Conversations about risk, inflation and diversification may deserve a fresh look, even with clients of many years’ standing.

New sources of information

Technology is changing how investors gather ideas at a remarkable pace. Regular use of AI assistants for investment ideas or information quadrupled in a single year to reach 19 per cent. Seven in ten investors have used AI to help inform an investment decision at some point.

Of those, 59 per cent acted on its recommendations, and 90 per cent say they felt satisfied with the result.

Social media plays a growing role too. Nearly half of investors (46 per cent) turn to influencers for investment information. That rises to 68 per cent in India and 65 per cent in Brazil, while France (28 per cent), Spain (37 per cent) and Germany (40 per cent) trail well behind.

Amundi’s research suggests investors use these channels alongside professional advice, often to test an idea or check a recommendation. More than 60 per cent of respondents report access to at least some professional advice. And 59 per cent now receive all or part of that advice online.

Satisfaction offers a limited measure of decision quality, of course. An investor who acted on an AI suggestion during a strong run in equities would likely feel pleased whatever the reasoning behind it. The real test of those tools will come in a sustained downturn.

The case for cash

There is also a counter argument to the study’s concern about excess cash. In 2022, global equities and bonds fell together as central banks lifted rates. Savers holding cash avoided losses that hit balanced portfolios hard that year.

Markets have rewarded patient investors over long periods, but the reward rarely arrives in a straight line. For a retiree drawing an income, a larger cash buffer can prevent the forced sale of growth assets in a falling market.

The right amount of cash depends on the client’s needs, spending and timeline rather than on any rule of thumb. As more savers weigh their first step into markets over the coming year, advisers who can match a client’s confidence with real understanding will be well placed to help them take it.