Investor sentiment may be higher in Australia than elsewhere, but overseas investors are more likely than Aussies to seek professional financial advice.
According to a recent Goldman Sachs Asset Management investor survey, Australia was ranked as the safest economy to invest in by 68% of respondents, followed by Switzerland (12%), China (9%) and Germany (6%).
German respondents ranked their own economy as the safest investment haven but, at (33.3%), the vote of confidence in their home turf was not resounding. Switzerland was the second most popular safe haven amongst German investors (31.7%), followed by China (12.1%). Italian respondents also opted for Germany and Switzerland (both 31%), followed by China (12%).
However, despite Australian investors giving their own economy a vote of confidence, Goldman Sachs Asset Management head of third party distribution Jessica Jones believes that the mood of Australian investors still doesn’t match up to how good things are in the Lucky Country.
“One of the things that has really struck me as a European coming over to Australia is really how good things here are compared to Europe, where I’ve been on the front line of the European crisis. The macroeconomic conditions have been really nice to see,” she said. “Investors here are not as optimistic as the resilience of the economy would suggest.”
She added that, while there is an air of cautious optimism, cash and term deposits are still front of mind for Australian investors, with 28% of respondents saying that they intended to invest more into these investments next year.
“In the current environment we believe investors should maintain a diversified portfolio and an active approach to equity and fixed interest investment.”
Who provides the advice?
When it came to the question of what drives investors to make their investment decisions, only 17% of Australian respondents said that they relied on their financial planner for advice. Forty-four per cent said that they relied on themselves and didn’t trust anyone else, 25% said they relied on media commentators and 14% said they relied on friends and relatives.
The European picture was slightly rosier for financial services professionals, with 25% of German respondents, for example, saying that they relied on advice from their financial planner and 47% taking advice from their bank. Economic news influenced 30.3% of German respondents. Other criteria included past performance (24%), press articles (18.5%) and political risk (17.9%).
Meanwhile, when it came to long-term financial planning, RaboDirect’s National Savings and Debt Barometer found that 66% of Australians admitted they had no long-term financial plan, with 23% saying that they felt that nothing they could do would make a big difference to their financial situation.
Forty-six per cent of respondents had less than one month’s savings in reserve, and 20% said they had no savings at all. This worrying trend has also been observed in the USA, with 54% of respondents to a Huffington Post survey saying that they had not set up an emergency cash savings strategy, and that as a result they felt they would be stuck in their current situation for the foreseeable future. Forty-one per cent of respondents had less than $500 to fall back on.
When it came to investor satisfaction, 10.1% of German respondents were ‘very satisfied’ with the return on their investments, 44.9% were ‘partially satisfied’, 25.5% were ‘partially dissatisfied’ and 12.3% were ‘hugely dissatisfied’. The ‘hugely dissatisfied faction was 25% amongst Italian respondents, with 41% stating that they were dissatisfied, 31% partially satisfied and just 3% satisfied.
Australian respondents appeared to be more optimistic than their European counterparts, with 40% expecting a rate of return on their investments of 5-10% over the next three years. Twenty-nine per cent expected 2-5%, followed by 10%-plus (14%), 0-2% (8%) 20%-plus (5%) and negative returns (3%).