How do people invest?
While the majority of investors surveyed take a balanced approach to risk, it’s worth noting in which markets more investors deviate from the middle – and what that might mean both for how financial firms communicate their offerings and where advisors can best support their clients.
For example, the sizeable ‘very conservative’ group of investors in the UK and India suggests that investors in these markets may be extra-sensitive to volatile market fluctuations, and may prefer hearing about how a certain financial product or advisory process can account for and soften such impacts. On the other hand, the considerable number of ‘fairly aggressive’ investors in China and Hong Kong may resonate more with how a product or advisory service lends itself well to an agile, opportunity-seeking investment style.
With that said, if investors with a stronger appetite for risk also invest with more short-term, unpredictable goals in mind, such as personal healthcare costs or the costs of caring for older generations, they may face potential issues with liquidity — a conflict that advisors can help plan for and avoid.
Investors’ approach to risk
Why do people invest?
A simple phrase — but, really, only the tip of the iceberg. Because buoying up those three words is a foundation of valuable client insight for banks and wealth managers alike. What motivates someone to invest and what methods do they use? How might their knowledge about investing influence their appetite for risk? And which assets are most attractive for them to invest in?
The majority of investors value taking a hands-on approach to their wealth, with at least 65% in all markets surveyed stating that they manage their own investments — bearing in mind that this approach is nuanced and could reflect everything from sailing their ship truly alone to acting as captain, collaborating with a seasoned crew.
As we can see, investors do still appreciate financial guidance, be it from a bot or a being. Over half of investors surveyed in China use robo-advisory, the most of any market surveyed, and, while a fair few investors appreciate human advisory — stating that they currently have a financial planner — even more interesting to consider is where that appreciation is geared to grow most sharply in the future. Investors surveyed in Germany, China, and Hong Kong most state a keener interest in the use of financial advisors in the future vs. today, hinting at potential new client onboarding opportunities to come.
What do people invest in?
Why do people invest?
FIND OUT MORE
The relationship between knowledge
and appetite for risk
An investor’s approach to risk may be influenced by a variety of factors: the goal they’re investing towards, what stage of life they’re in, or their natural tendency to be risk-taking or risk-averse. Another important factor may be ‘knowledge level’ — how much does one feel they know about investing? When consulting Avaloq’s aggregated end-client data, stored from banks and wealth managers using our systems in EMEA, we see a ‘check-mark’-like relationship between self-reported knowledge levels and the risk class of product investors choose.
Put simply: when investors know less, and consider their knowledge level to be ‘Basic’, they tend to choose products of a medium risk class — not too risky, but not too cautious. The more they learn, progressing to an ‘Intermediate’ knowledge level, the more they perhaps recognize just how much more there is to learn — or to lose — and their approach changes, tending towards low risk products. At last, when an investor considers themselves to be an 'Expert', they favour higher risk products.
In May 2021, we surveyed 1,430 affluent-to-UHNW investors with at least 250,000 USD in investable assets. We also analysed aggregated, anonymized end-client data, stored by banks and wealth managers using Avaloq systems in EMEA.
Methodology
Do you have any questions about this report or the insights we’ve shared? We welcome you to get in touch with one of our experts.
Ada Cirlia
Research & Insights Lead
Ada.Cirlia@avaloq.com
Dr. Shardul Paricharak
Senior Data Scientist
Shardul.Paricharak@avaloq.com
Daniel Studer
Head of Content Marketing Daniel.Studer@avaloq.com
Contact and authors
Affluent-to-UHNW investors, defined as those that have over 250,000 USD in investible assets:
Methodology
“Sure, I invest.”
In May 2021, we posed these very questions to a range of affluent-to-UHNW investors across 10 countries in Europe and Asia. Now, we’re sharing their answers with you. Explore the fundamentals of investor behaviour from Switzerland to Singapore and see how these insights can help guide your organization.
When it comes to why investors are growing their wealth, answers vary from market to market. However, the reason most can agree on is also the most generic: retirement income. For some markets, like Switzerland, the UK, and Japan, it even stands out as the lead motivator, with fewer respondents choosing other, more specific options. In contrast, in nations like China or India, investors claim a wide range of reasons for investing, with each motivator being chosen by at least a third of those surveyed.
Together, this suggests that some investors may think about their investment goals in a more abstract way — preferring an all-encompassing ‘retirement income’ bucket — while others may think more tangibly, mentally earmarking money in advance for more defined goals, like ‘future health care costs’ or ‘costs of younger generation’.
Although the latter type of goal may indeed be more specific, it is less so when it comes to its investment horizon, with situations like those related to healthcare costs potentially appearing unexpectedly and demanding fast, flexible liquidity.
It’s clear that understanding one’s motivations for investing is key for financial organizations. Saying that, it’s one thing to engage with a client one-to-one, where an advisor can understand that particular investor’s unique motivations; it’s another thing when an organization wants to launch an investment product offering geared towards a particular market or shape an advisory process to reflect local needs. Knowing investors’ shared motivations, and how they differ from market to market, can be a guiding light. For example, piquing client interest in a financial product with the prospect that returns could help pay for their grandchildren’s education might work better in China than in Singapore, where investors may be more inclined to hear about a higher retirement income.
Key takeaways
People invest for a variety of reasons, from the more generic and long-term (ex. retirement income) to the more specific and potentially unexpected (ex. costs of future healthcare), underlining the need for organizations to leverage platforms that support clients with their very individual goals. At an aggregate level, understanding the shared motivations of clients in a market — and how they differ to other markets — can also help guide an organization in creating relevant, more localized product offerings or advisory processes.
1.
Many investors value a hands-on approach to their wealth, suggesting that financial advisory should be there to guide them, not decide for them — a point worth especially noting in markets like Germany, China, and Hong Kong, where investors surveyed most reveal a keener interest in the use of financial advisors in the future vs. today.
2.
While most have a balanced approach to risk, a fair portion of investors surveyed, particularly in China and Hong Kong, claim a more aggressive stance; if these same investors also invest for goals with an undefined time-horizon, and for which funds are unexpectedly required, this may indicate a conflict in strategy — one which advisors can help balance. In parallel, knowing variations in risk approach by market can help organizations understand how to best communicate financial offerings; more conservative markets may value hearing about stability in their services, while more aggressive markets may resonate more with an emphasis on agility.
3.
The relationship between an investor’s self-reported knowledge level and the risk class of products they prefer forms a ‘check-mark’. At a Basic knowledge level, investors go for medium risk class products. At an Intermediate knowledge level, they prefer low risk products. At an Expert knowledge level, they tend towards higher risk products.
4.
Particularly when compared to the narrower approach of those in European markets, investors surveyed in China and India stand out for investing in a variety of assets for a variety of reasons. Although Indian investors reveal a more conservative approach to risk, those surveyed in China lean more aggressive, further cementing their image as an avid, driven group of investors.
5.
73%
75%
65%
79%
78%
77%
89%
74%
85%
72%
8%
17%
10%
52%
36%
23%
13%
12%
21%
14%
6%
23%
24%
25%
42%
11%
5%
13%
40%
14%
10%
23%
18%
38%
31%
21%
6%
19%
31%
14%
18%
9%
11%
17%
8%
20%
13%
14%
25%
29%
A look at the fundamentals of investor behaviour across Europe and Asia
UNITED KINGDOM
SWITZERLAND
INDIA
AUSTRALIA
JAPAN
SINGAPORE
HONG KONG
CHINA
FRANCE
GERMANY
69%
63%
36%
66%
38%
48%
73%
62%
62%
48%
32%
33%
21%
35%
67%
52%
52%
31%
32%
60%
25%
25%
35%
17%
49%
36%
19%
12%
19%
55%
11%
24%
16%
19%
35%
27%
27%
30%
12%
44%
24%
36%
31%
22%
64%
43%
30%
14%
35%
52%
10%
21%
23%
19%
33%
28%
16%
9%
11%
34%
33%
46%
43%
31%
38%
55%
32%
17%
51%
61%
17%
24%
29%
18%
46%
35%
21%
11%
20%
48%
SAVING FOR ME
SAVING FOR OTHERS
SAVING FOR MORE
Retirement
income
Future personal
health care
costs
My own entrepreneurial
activities
Costs of
older
generations*
Costs of
younger
generations**
Charitable
donations /
societal good
Property
investments
Investing
into other
businesses
*ex. health care or housing for elderly parents
**ex. future education
UNITED KINGDOM
SWITZERLAND
INDIA
AUSTRALIA
JAPAN
SINGAPORE
HONG KONG
CHINA
FRANCE
GERMANY
47%
16%
28%
7%
2%
45%
16%
25%
14%
1%
43%
16%
28%
13%
0%
20%
34%
35%
8%
2%
3%
16%
36%
42%
3%
11%
16%
36%
34%
3%
4%
22%
50%
21%
3%
13%
16%
47%
17%
7%
12%
33%
44%
11%
1%
33%
15%
31%
10%
10%
INDIA
AUSTRALIA
JAPAN
SINGAPORE
HONG KONG
CHINA
UNITED KINGDOM
FRANCE
GERMANY
SWITZERLAND
Real-estate
Investments
funds
Bonds
Public-traded
stocks/equity
Cash
Crypto currencies
ETFs
Commodities
Foreign
currencies/FX
Private
equity
INDIA
AUSTRALIA
JAPAN
SINGAPORE
HONG KONG
CHINA
UNITED KINGDOM
FRANCE
GERMANY
SWITZERLAND
Very aggressive
Fairly aggressive
Balanced
Fairly conservative
Very conservative
47%
33%
30%
43%
60%
29%
57%
57%
43%
50%
76%
33%
33%
51%
55%
78%
56%
23%
39%
44%
50%
20%
26%
37%
58%
52%
44%
23%
25%
24%
52%
41%
55%
46%
53%
72%
42%
39%
46%
60%
57%
46%
59%
53%
65%
49%
53%
22%
32%
28%
49%
20%
11%
29%
27%
22%
23%
33%
45%
25%
29%
13%
38%
36%
55%
51%
11%
13%
41%
27%
34%
16%
22%
19%
24%
46%
21%
18%
30%
27%
35%
14%
32%
25%
54%
42%
15%
15%
26%
21%
48%
20%
6%
21%
30%
26%
22%
25%
16%
15%
Product Risk Category
Self-reported Knowledge Level
Intermediate
Expert
Basic
Low
High
SHOW DATA
HIDE DATA
Click the data button
and countries to explore
Click each investing
method to explore
SHOW DATA
HIDE DATA
Click the data button
and countries to explore
SHOW DATA
HIDE DATA
Click the data button
and countries to explore
While the range of assets investors invest in is unique to each market, a few do stand out as favourites, with, unsurprisingly, publicly-traded stocks/equity, cash, and investment funds often falling into a market’s Top 3. In contrast to the narrower focus of investors surveyed in European markets and Japan, investors in India and China reveal interest in a much wider array of assets – a similar pattern to what we find in how these markets approach investing motivations (see “Why People Invest”).
I manage my
own investments
I invest via
robo-advisory
I invest via
crowd-funding
platforms
I currently
have a financial
advisor/planner
I plan to work with
a financial advisor/
planner in the future
Why do people invest?
A look at the fundamentals of investor behaviour across Europe and Asia
In May 2021, we posed these very questions to a range of affluent-to-UHNW investors across 10 countries in Europe and Asia. Now, we’re sharing their answers with you. Explore the fundamentals of investor behaviour from Switzerland to Singapore and see how these insights can help guide your organization.
When it comes to why investors are growing their wealth, answers vary from market to market. However, the reason most can agree on is also the most generic: retirement income. For some markets, like Switzerland, the UK, and Japan, it even stands out as the lead motivator, with fewer respondents choosing other, more specific options. In contrast, in nations like China or India, investors claim a wide range of reasons for investing, with each motivator being chosen by at least a third of those surveyed.
Together, this suggests that some investors may think about their investment goals in a more abstract way — preferring an all-encompassing ‘retirement income’ bucket — while others may think more tangibly, mentally earmarking money in advance for more defined goals, like ‘future health care costs’ or ‘costs of younger generation’.
Although the latter type of goal may indeed be more specific, it is less so when it comes to its investment horizon, with situations like those related to healthcare costs potentially appearing unexpectedly and demanding fast, flexible liquidity.
It’s clear that understanding one’s motivations for investing is key for financial organizations. Saying that, it’s one thing to engage with a client one-to-one, where an advisor can understand that particular investor’s unique motivations; it’s another thing when an organization wants to launch an investment product offering geared towards a particular market or shape an advisory process to reflect local needs. Knowing investors’ shared motivations, and how they differ from market to market, can be a guiding light. For example, piquing client interest in a financial product with the prospect that returns could
help pay for their grandchildren’s education
might work better in China than in Singapore, where investors may be more inclined to hear about a higher retirement income.
A simple phrase — but, really, only
the tip of the iceberg. Because buoying up those three words is a foundation
of valuable client insight for banks and wealth managers alike. What motivates someone to invest and what methods do they use? How might their knowledge about investing influence their appetite for risk? And
which assets are most attractive
for them to invest in?
“Sure, I invest.”
*ex. health care or housing for elderly parents
**ex. future education
UNITED KINGDOM
SWITZERLAND
INDIA
AUSTRALIA
JAPAN
SINGAPORE
HONG KONG
CHINA
FRANCE
GERMANY
Property
investments
Investing into other businesses
SAVING FOR MORE
33%
46%
43%
31%
38%
55%
32%
17%
51%
61%
17%
24%
29%
18%
46%
35%
21%
11%
20%
48%
SAVING FOR OTHERS
Costs of
older
generations*
Costs of
younger
generations**
Charitable
donations /
societal good
11%
24%
16%
19%
35%
27%
27%
30%
12%
44%
10%
21%
23%
19%
33%
28%
16%
9%
11%
34%
24%
36%
31%
22%
64%
43%
30%
14%
35%
52%
SAVING FOR ME
Retirement
income
Future personal
health care
costs
My own entrepreneurial
activities
25%
25%
35%
17%
49%
36%
19%
12%
19%
55%
32%
33%
21%
35%
67%
52%
52%
31%
32%
60%
69%
63%
36%
66%
38%
48%
73%
62%
62%
48%
HIDE DATA
SHOW DATA
Click the data button
and countries to explore
How do people invest?
The majority of investors value taking a hands-on approach to their wealth, with at least 65% in all markets surveyed stating that they manage their own investments — bearing in mind that this approach is nuanced and could reflect everything from sailing their ship truly alone to acting as captain, collaborating with a seasoned crew.
As we can see, investors do still appreciate financial guidance, be it from a bot or a being. Over half of investors surveyed in China use
robo-advisory, the most of any market surveyed, and, while a fair few investors appreciate human advisory — stating that they currently have a financial planner — even more interesting to consider is where that appreciation is geared to grow most sharply in the future. Investors surveyed in Germany, China, and Hong Kong most state a keener interest in the use of
financial advisors in the future vs. today, hinting
at potential new client onboarding
opportunities to come.
73%
75%
65%
79%
78%
77%
89%
74%
85%
72%
8%
17%
10%
52%
36%
23%
13%
12%
21%
14%
6%
23%
24%
25%
42%
11%
5%
13%
40%
14%
10%
23%
18%
38%
31%
21%
6%
19%
31%
14%
18%
9%
11%
17%
8%
20%
13%
14%
25%
29%
I manage my
own investments
I invest via
robo-advisory
I invest via
crowd-funding
platforms
I currently
have a financial
advisor/planner
I plan to work with a
financial advisor/planner
in the future
INDIA
AUSTRALIA
JAPAN
SINGAPORE
HONG KONG
CHINA
UNITED KINGDOM
FRANCE
GERMANY
SWITZERLAND
Investors’ approach
to risk
While the majority of investors surveyed take a balanced approach to risk, it’s worth noting in which markets more investors deviate from the middle – and what that might mean both for how financial firms communicate their offerings and where advisors can best support their clients.
For example, the sizeable ‘very conservative’ group of investors in the UK and India suggests that investors in these markets may be extra-sensitive to volatile market fluctuations, and may prefer hearing about how a certain financial product or advisory process can account for and soften such impacts. On the other hand, the considerable number of ‘fairly aggressive’ investors in China and Hong Kong may resonate more with how a product or advisory service lends itself well to an agile, opportunity-seeking investment style.
With that said, if investors with a stronger appetite for risk also invest with more short-term, unpredictable goals in mind, such as personal healthcare costs or the costs of caring for older generations, they may face potential issues with liquidity — a conflict that advisors can help plan for and avoid.
The relationship between knowledge
and appetite for risk
Product Risk Category
Self-reported Knowledge Level
Intermediate
Expert
Basic
Low
High
An investor’s approach to risk may be influenced by a variety of factors: the goal they’re investing towards, what stage of life they’re in, or their natural tendency to be risk-taking or risk-averse. Another important factor may be ‘knowledge level’ — how much does one feel they know about investing? When consulting Avaloq’s aggregated end-client data, stored from banks and wealth managers using our systems in EMEA, we see a ‘check-mark’-like relationship between self-reported knowledge levels and the risk class of product investors choose.
Put simply: when investors know less, and consider their knowledge level to be ‘Basic’, they tend to choose products of a medium risk class — not too risky, but not too cautious. The more they learn, progressing to an ‘Intermediate’ knowledge level, the more they perhaps recognize just how much more there is to learn — or to lose — and their approach changes, tending towards low risk products. At last, when an investor considers themselves to be an 'Expert', they favour higher risk products.
Very aggressive
Fairly aggressive
Balanced
Fairly conservative
Very conservative
INDIA
AUSTRALIA
JAPAN
SINGAPORE
HONG KONG
CHINA
UNITED KINGDOM
FRANCE
GERMANY
SWITZERLAND
SHOW DATA
HIDE DATA
Click the data button
and countries to explore
What do people invest in?
50%
47%
33%
30%
43%
60%
29%
57%
57%
43%
76%
33%
33%
51%
55%
78%
56%
23%
39%
44%
50%
20%
26%
37%
58%
52%
44%
23%
25%
24%
52%
41%
55%
46%
53%
72%
42%
39%
46%
60%
57%
46%
59%
53%
65%
49%
53%
22%
32%
28%
49%
20%
11%
29%
27%
22%
23%
33%
45%
25%
29%
13%
38%
36%
55%
51%
11%
13%
41%
27%
34%
16%
22%
19%
24%
46%
21%
18%
30%
27%
35%
14%
32%
25%
54%
42%
15%
15%
26%
21%
48%
20%
6%
21%
30%
26%
22%
25%
16%
15%
Real-estate
Investments
funds
Bonds
Public-traded
stocks/equity
Cash
Crypto currencies
ETFs
Commodities
Foreign
currencies/FX
Private
equity
INDIA
AUSTRALIA
JAPAN
SINGAPORE
HONG KONG
CHINA
UNITED KINGDOM
FRANCE
GERMANY
SWITZERLAND
While the range of assets investors invest in is unique to each market, a few do stand out as favourites, with, unsurprisingly, publicly-traded stocks/equity, cash, and investment funds often falling into a market’s Top 3. In contrast to the narrower focus of investors surveyed in European markets and Japan, investors in India and China reveal interest in a much wider array of assets — a similar pattern to what we find in how these markets approach investing motivations (see “Why People Invest”).
Key takeaways
People invest for a variety of reasons, from the more generic and long-term (ex. retirement income) to the more specific and potentially unexpected (ex. costs of future healthcare), underlining the need for organizations to leverage platforms that support clients with their very individual goals. At an aggregate level, understanding the shared motivations of clients in a market — and how they differ to other markets — can also help guide an organization in creating relevant, more localized product offerings or advisory processes.
1.
Many investors value a hands-on approach to their wealth, suggesting that financial advisory should be there to guide them, not decide for them — a point worth especially noting in markets like Germany, China, and Hong Kong, where investors surveyed most reveal a keener interest in the use of financial advisors in the future vs. today.
2.
While most have a balanced approach to risk, a fair portion of investors surveyed, particularly in China and Hong Kong, claim a more aggressive stance; if these same investors also invest for goals with an undefined time-horizon, and for which funds are unexpectedly required, this may indicate a conflict in strategy — one which advisors can help balance. In parallel, knowing variations in risk approach by market can help organizations understand how to best communicate financial offerings; more conservative markets may value hearing about stability in their services, while more aggressive markets may resonate more with an emphasis on agility.
3.
The relationship between an investor’s self-reported knowledge level and the risk class of products they prefer forms a ‘check-mark’. At a Basic knowledge level, investors go for medium risk class products. At an Intermediate knowledge level, they prefer low risk products. At an Expert knowledge level, they tend towards higher risk products.
4.
Particularly when compared to the narrower approach of those in European markets, investors surveyed in China and India stand out for investing in a variety of assets for a variety of reasons. Although Indian investors reveal a more conservative approach to risk, those surveyed in China lean more aggressive, further cementing their image as an avid, driven group of investors.
5.
Sign up for the newsletter
This is the first chapter of our Research & Insights series, where we explore everything from the more foundational — why people invest and what makes for a good financial advisor — to the more topical, such as AI and investors’ willingness to use it, the arrival of BigTech in banking, and the rise of ESG investing.
If you enjoyed this report, sign up to our Research & Insights newsletter to be the first to know when our next instalment is released, as well as benefit from other exclusive industry insights.
Do you have any questions about this report or the insights we’ve shared? We welcome you to get in touch with one of our experts.
Ada Cirlia
Research & Insights Lead
Ada.Cirlia@avaloq.com
Dr. Shardul Paricharak
Senior Data Scientist
Shardul.Paricharak@avaloq.com
Daniel Studer
Head of Content Marketing Daniel.Studer@avaloq.com
Contact and authors
As part of our larger research approach, we analysed aggregated, anonymized end-client data, stored by banks and wealth managers using Avaloq systems in EMEA, as well as surveyed four respondent groups: Avaloq clients, 500+ retail investors, 1400+ affluent-to-UHNW investors, and future executive leaders via the 2021 IMD MBA programme cohort.
About this report
FIND OUT MORE
7%
28%
47%
16%
2%
14%
25%
45%
16%
1%
13%
28%
43%
16%
0%
20%
34%
35%
8%
2%
3%
36%
42%
3%
16%
11%
16%
36%
34%
3%
4%
22%
50%
21%
3%
13%
16%
47%
17%
7%
12%
33%
44%
11%
1%
33%
15%
31%
11%
10%
This is the first chapter of our Research & Insights series, where we explore everything from the more foundational — why people invest and what makes for a good financial advisor — to the more topical, such as AI and investors’ willingness to use it, the arrival of BigTech in banking, and the rise of ESG investing.
If you enjoyed this report, sign up to our Research & Insights newsletter to be the first to know when our next instalment is released, as well as benefit from other exclusive industry insights.
GET MORE INSIGHTS