WEF survey identifies the biggest hurdle to retail investment

As much as 40 per cent of investors do not know how to invest, according to a survey conducted by the World Economic Forum (WEF). The study further highlighted that roughly 70 per cent of people would be more likely to invest, or invest more, with expanded financial education.

Based on a global survey of over 9,000 respondents from 9 countries and expert interviews, the report highlights the importance of enhancing personalised advice for retail investors and improving the reliability of information and investor protections. It also underscores opportunities to improve education, trust and access to increase inclusion in global capital markets. All respondents had at least $1,000 (or local equivalent) in investable assets and were over 18 years of age.

“Even amid market volatility, participation in capital markets can empower people to take ownership of their financial future,” said Meagan Andrews, Investing Lead at the World Economic Forum. “We’re just now starting to understand the new wave of retail investors and the power they are wielding in the market. It's important industry leaders take steps to empower individuals so they can optimize financial decisions for their betterment, whether they currently invest or not,” Andrews added.  

The survey results provided critical insights into the factors and mindsets impacting individuals’ decisions to enter capital markets globally.  

Notably, the survey found that individuals primarily look to capital markets to build long-term wealth, especially in emerging markets. Half of those surveyed were investing to save for retirement or to build generational wealth.

Retail investors are skewing younger, with Gen Z and younger millennials investing at higher rates. Younger investors are much more likely than their peers to have received financial education earlier in life.

Meanwhile, non-investors are less confident they will achieve their long-term financial objectives and, when compared to investors, a higher proportion only learned about investing many years after entering the workforce. “Their main reasons for avoiding financial markets were fear of losing money and because of an investing knowledge gap,” the survey said.

The study further highlighted that generational wealth also plays a vital role in deciding to invest early. Respondents whose parents invested in the market reported that they began investing earlier in life compared to those with parents who did not invest.

The survey also revealed significant gaps in product awareness. For instance, surveyed investors noted they had a greater understanding of newer products like cryptocurrencies and non-fungible tokens (NFTs) compared to more traditional instruments like stocks and bonds.