Investing requires a delicate balance of risk and reward. For that reason, a one-size-fits-all approach is rarely the “right” answer. 

A successful investment strategy needs to weigh an individual’s financial circumstances against their risk profile and capacity for loss. It also needs to align with their long-term goals.

Some investors lack the patience and confidence required to invest over the long term. But expert knowledge, clearly communicated, can provide a huge amount of reassurance and ensure your clients’ plans remain on track.

This is especially true for nervous investors.

Keep reading to find out how our financial planners can help your clients achieve their investment dreams.

The FCA’s Consumer Duty aligns with Boolers’ approach to investor individuality

The Financial Conduct Authority’s (FCA) Consumer Duty came into effect in July 2023. One of its main aims is to “ensure a higher and more consistent standard of consumer protection for users of financial services”. 

Specific guidance encourages firms to think about their clients’ “needs, characteristics, and objectives [and] how they behave, at every stage and in each interaction”. 

Consumer Duty goes on to acknowledge that investors “are susceptible to cognitive and behavioural biases”. These biases can exist for the wealthiest, most experienced investors, as well as for the nervous investor just starting out.

But expert financial advice can help.

1. Clear communication from the outset

By the time an individual considers investing, their attitudes to money will likely be fully formed. In most cases, this will have begun many years ago, often during childhood.

Our experiences with money while growing up can have a huge effect on our attitudes in later life, whether that means aping or rebelling against the lessons their parents taught them. This can lead to investment nervousness or overconfidence in adulthood, even if the investors themselves barely understand the impact certain pivotal moments had.

As financial planners, we get to know each of our clients individually. This means understanding their attitudes to money, their current financial situation, and their life-long goals.

From this solid foundation, we use jargon-free communication to help put our clients in control.

A recent Lloyds Bank report found that half (50%) of Brits are “scared” of investing – the figure rises to 58% for women. The survey found that 38% were baffled by “complicated” financial terms including: 

  • Asset class (77%)
  • Dividend (42%) 
  • Shares (31%)
  • Stocks (37%)
  • Portfolio (37%)

Worryingly, given the current climate, 29% of those surveyed didn’t understand the term “inflation”, with 6% claiming never to have heard of it. 

2. Individual solutions and a focus on goals

Before we invest our clients’ money, we build a thorough understanding of their attitude to risk and their expectations of returns. 

By getting to know our clients’ circumstances and aspirations, we can put solutions in place that work for them. In practice, that means a personalised investment proposal aligned with their aims and objectives, guided by our in-house investment team.

Whether your clients are looking for capital growth, to generate an income, or to protect their wealth for future generations, our bespoke and impartial advice can help.

By focusing on your clients’ goals and communicating plainly, we can also help to educate them in the avoidance of biases. 

These affect us all and can be cognitive or behavioural. 

Cognitive biases generally involve decisions based on pre-conceived ideas and might include:

  • Confirmation bias, which causes investors to concentrate only on opinions and beliefs that match their own.
  • Trend-chasing bias, or herd mentality, which is a kind of bandwagon effect that can supersede an individual’s own plans and goals.

Emotional biases, meanwhile, are based on personal feelings. This could mean making knee-jerk reactions but choices could also be deeply rooted in childhood attitudes. 

These types of biases could include:

  • Loss-aversion bias, which is caused by the human propensity to feel losses more strongly and personally than gains.
  • Endowment bias, which can see investors place an unrealistically high valuation on assets they hold, compared to those they do not.

3. Ongoing support and reassurance

Back in June, we looked at Why the cost of living crisis has made advice more important than ever, specifically as a means of providing reassurance. 

FTAdviser confirms that two-thirds (66%) of planners currently see their main role as providing reassurance. This can be particularly important for investors, especially nervous ones.

The last few years have been tough – from the coronavirus pandemic to the war in Ukraine and the cost of living crisis. Global events create emotional turmoil for individuals and create uncertainty in world markets. It is at these times that our ongoing support, regular reviews, and annual face-to-face meetings add real value.

Our investors have access to a named financial planner, an investment manager and our investment support team. This, alongside a bespoke yet cohesive strategy, helps to ensure our investors feel confident, in control, and have peace of mind, no matter what happens in the wider economy.

Get in touch

If you have clients who would benefit from help managing their investments, please get in touch. Email or call 0116 240 7070.

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.