Faced with retirement funding challenges, French investors say they need new investment approaches and more financial advice

Funding their retirement, a long-term priority

Retirement is the number one priority for French investors, and 73% believe that the responsibility for retirement is shifting to individuals, away from governments and employers. They also recognise the existence of large, external threats and other, more personal issues that could have an impact on their retirement finances. In France, 43% of investors believe that inflation poses a threat to their financial wellbeing in retirement, 41% have expressed concerns over their country’s financial situation, and 40% worry about insufficient government pensions. “French investors are acutely aware of their growing responsibility for the funding of their retirement and worried that they won't be able to sustain their standard of living. The challenge is to translate this awareness into a new approach to investing,” says Christophe Point, Director of Distribution for France, French-speaking Switzerland and Monaco at Natixis Global Asset Management.

French respondents are less optimistic than other investors globally

Only 54% of French investors (versus 73% globally) believe their portfolio will perform well in 2015. While 44% of international investors feel optimistic they will achieve better returns than 2014, this figure drops to 21% in France. “French investor confidence is improving at a slower pace, because investors are more sensitive to the inherent volatility of financial markets and feel less prepared. They are aware of the need to generate yield to meet their long-term financial requirements, but 69% have no clear investment objectives and 73% have no financial plan in place,” explains Christophe Point.

Economic and political factors are also a cause for concern. A possible Eurozone recession in the next 12 months was cited as a threat by 48% of respondents (versus 36% globally), followed by a global economic slowdown (43%), low global growth (41%), geopolitical tensions (28%), a rise in interest rates (25%), and terrorism (25%).

French investors are therefore in search of greater security and reliable returns. Many (82%) worry about market shocks, yet feel powerless to protect their investments from the impact. This is partly due to the fact that 53% struggle to avoid making emotional investment decisions in times of surging volatility.

As investors seek out new investment solutions, financial advisors have a key role to play

Interestingly, the survey also revealed that while French investors remain bullish on equities (34% of investors believe stock markets will outperform other asset classes this year), 69% say that traditional approaches to portfolio allocation, mixing stocks and bonds, are no longer the best ways to pursue returns. “Investors are looking for solutions than can protect them from market volatility, diversify their portfolio risk and deliver superior results. They are ready to invest differently,” explains Christophe Point.

To better navigate complex markets, 89% of French investors – including those who don’t consult with advisors – believe that getting professional financial advice is important in making disciplined and rational investment decisions.

French investors are also turning to alternatives in greater numbers. Fourty-six percent invest – up 10% from 2014 – report investing in alternatives. A much higher 67% of French survey respondents would consider alternatives if their advisor recommended them.

“The role of financial advisors has never been so important. Investors are aware that they need to review their investment approach, but to they need help getting there,” adds Christophe Point. “The challenge for financial advisors is to help investors set clear long-term goals based on their personal investment needs, focus on effectively budgeting risk in their portfolios, and consider investment strategies better suited to today’s complex markets.”

*With assets of $200,000 or more.