Affluent to ultra-high-net worth investors in the UK are the most conservative in terms of investment risk among international peers, according to new research, shared exclusively with City A.M. today.
More than half of wealthy UK-based investors rated themselves as conservative in terms of their approach to risk, with 20 per cent describing themselves as ‘very conservative’.
Only 10 per cent said they take an aggressive approach to risk, the lowest of any nation surveyed by digital banking solution provider Avaloq, which approached banking and wealth management managers in ten major economies, including China, India, Switzerland and Japan.
In contrast, almost half of respondents in China said they were aggressive in terms of risk, with just 19 per cent saying they were conservative.
Advisors yes, managers nah
Respondents in the UK also stand out for the relatively high use of financial advisers and planners, with around a third saying they use them, the highest of any of the nations surveyed.
While a high proportion of individuals, around 72 per cent, said they also manage their own investments, this is still the second lowest globally after France (65 per cent).
In addition, one in seven (14 per cent) of UK respondents reported they use a robo-advisory to manage their investments.
Looking further into investment behaviours and market sentiment of wealthy investors, the primary reason (cited by 66 per cent) given for saving and investing by UK respondents is for their retirement – perhaps reinforcing the low-risk, long-term mindset of UK investors.
Retirement was ranked far higher than other reasons such as future healthcare costs (35 per cent) and entrepreneurial activities (17 per cent), the Avaloq team found.
Brits like cash
In terms of asset classes and underlying investments, affluent investors in the UK show little appetite for exposure to complex structured instruments.
According to Avaloq’s study, they have one of the highest allocations to investment funds (cited by 56 per cent) though use of ETFs is the lowest of any nation at just 11 per cent.
In addition, more than half (53 per cent) say they hold investments in cash.
Despite a high number of UK respondents stating they have a low-risk approach to investing, almost a quarter (23 per cent) said they have exposure to cryptocurrencies in their portfolios, showing some understanding of emergent investment opportunities and, possibly, a need for advisory support.
The UK figure was in the middle in terms of respondents from other countries, with wealthy investors in India the most invested in cryptocurrencies (49 per cent).