69 percent investors willing to pay fee to financial advisors: Franklin Templeton Survey

While 97% of Indian investors are confident about achieving their financial goals, a majority of them think they can do it without equity exposure. Indian investors view professional financial advice as an important or very important factor for making investments - more than two-thirds (69%) of investors are willing to pay fees to their distributors/financial advisors, shows a survey conducted by Franklin Templeton of 9518 investors in 19 countries across Asia Pacific, Americas and Europe.

Indian investors are the most optimistic (83% of respondents) about their home country stock markets, out of the 19 countries surveyed by a Franklin Templeton global investor survey. However, similar to the global trend, majority of Indian investors are planning to adopt a more conservative strategy in 2013.

India

Respondents in India have the highest return expectations amongst all countries surveyed – 15% in 2013 and 22% over the next 10 years. However, high inflation is clearly the top factor making investors reluctant to invest in the stock markets in India followed by the state of the global economy. The top three asset classes cited by Indian investors for 2013 and the next 10 years are –

Amongst the respondents (middle income Indian investors) exposure to mutual funds is a quarter of their total investments and they expect it to increase by one-third over the next five years. Indian investors overwhelmingly expect local equity and fixed income markets to outperform their global counterparts.

Purchasing a new home is the top investment goal for investors in India for 2013. While retirement is one of the top three goals, compared to their global counterparts, Indian investors’ focus on retirement as a goal is the lowest amongst all the countries surveyed.

Harshendu Bindal, President, Franklin Templeton India said, “The survey clearly shows the strong optimism in India about the growth prospects, albeit with near-term concerns. Also, it is heartening to note that contrary to popular belief, there is willingness to pay advisory fees for professional advice, especially amongst middle income investors. Given the ongoing changes in the distribution landscape, this willingness augurs well for financial planners and advisors”.

“On the other hand, it is very clear that the industry needs to do a better job of increasing awareness and acceptance of equities and fixed income, as core asset classes. There continues to be a strong preference for physical assets such as gold and real estate, and an investing-at-home bias that needs to change. Financial savings need to be encouraged through a mix of policy incentives and increased awareness. This will not only benefit the average investor, but also create long term, productive savings pool essential for economic growth”

Global

Overwhelmingly, investors around the globe have greater expectations for 2013 stock market performance, particularly in emerging markets where 66% expect their local stock market will improve (versus 58% in developed markets). However, despite this optimism, 57% of those surveyed plan to pursue a more conservative investment strategy this year, with younger investors (aged 25 to 34) leading the charge toward ‘safer havens. In India, over 62% investors said they will adopt a more conservative approach towards their investments.

“Despite investors’ overall positive outlook, it appears that avoiding loss, rather than achieving higher returns, is still a top priority,” said Greg Johnson, President and Chief Executive Officer of Franklin Templeton Investments. “Clearly the market volatility over the past five years has reinforced a preference among investors for capital retention over investment gains.  As seen in recent years, this risk avoidance has led many investors to remain on the sidelines, missing opportunities. Working with a financial advisor can be the best resource for evaluating all sides of the risk equation.”