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Research reveals expat investors turning to low risk options
| Published: | 18 Mar at 6 PM |
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As the sad tales of losses due to bad advice soar, a survey has revealed that droves of expats as well as UK-based investors are turning to low-risk options.
Two thirds of investors approached during a recent survey have switched their preference to no- or low-risk products, with only one third willing to consider higher risk portfolios. Of this third, just half are willing to risk their savings by gambling on high-reward, high-risk investments.
Younger investors with families and those nearing retirement are the least likely to gamble with their money, however attractive the returns, and the least risk-averse are single investors in the 25-30 age range. The survey included data from financial advisors as well as over 1,000 investors of all ages.
Meanwhile, the Financial Conduct Agency has released its latest report warning self-employed FAs that its sales incentive regulations must be obeyed. Incentive schemes, it notes, are those in which remuneration to FAs is comprised by commissions, fees and other such income., as the individual remuneration is based on income gained from the sale of products or services.
The report points out that, where no regular salary is being paid and income depends on commissions, the risk of misselling is significantly increased. It also warns that small firms as well as self-employed FAs may not be acting according to the regulations.
For investors for whom the advice comes too late, the UK’s Financial Services Compensation Scheme (FSCS) has issued its latest list of named and shamed FA firms, aimed at clearing the way for compensation claims by misled investors. Firms in default are unlikely to have the funds to settle customer claims, with the FSCS able to step in and pay out.
The limit for FSCS compensation is normally £50,000 per investor per firm, but other limits may apply to certain financial products. Many of the FSCS’s formerly-listed firms’ directors have been hit with substantial fines for misconduct, and others have faced charges in court.
Two thirds of investors approached during a recent survey have switched their preference to no- or low-risk products, with only one third willing to consider higher risk portfolios. Of this third, just half are willing to risk their savings by gambling on high-reward, high-risk investments.
Younger investors with families and those nearing retirement are the least likely to gamble with their money, however attractive the returns, and the least risk-averse are single investors in the 25-30 age range. The survey included data from financial advisors as well as over 1,000 investors of all ages.
Meanwhile, the Financial Conduct Agency has released its latest report warning self-employed FAs that its sales incentive regulations must be obeyed. Incentive schemes, it notes, are those in which remuneration to FAs is comprised by commissions, fees and other such income., as the individual remuneration is based on income gained from the sale of products or services.
The report points out that, where no regular salary is being paid and income depends on commissions, the risk of misselling is significantly increased. It also warns that small firms as well as self-employed FAs may not be acting according to the regulations.
For investors for whom the advice comes too late, the UK’s Financial Services Compensation Scheme (FSCS) has issued its latest list of named and shamed FA firms, aimed at clearing the way for compensation claims by misled investors. Firms in default are unlikely to have the funds to settle customer claims, with the FSCS able to step in and pay out.
The limit for FSCS compensation is normally £50,000 per investor per firm, but other limits may apply to certain financial products. Many of the FSCS’s formerly-listed firms’ directors have been hit with substantial fines for misconduct, and others have faced charges in court.
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