AXA Wealth identifies gap in consumers' risk attitudes
AXA Wealth has identified that two thirds of consumers have a significant gap between their perceived investment risk appetite and their actual risk appetite.
The AXA Wealth Self study is said to be the first of its kind conducted in the UK. Published in conjunction with Prof Adrian Furnham from University College London, the study asked 2,000 consumers to rate their perceived risk attitudes then complete the AXA Wealth 14-step risk-profiling tool.
A ‘disconnect’ score was then calculated working out the difference between people’s perceived attitude versus their actual attitude.
Some 33 per cent had a stronger risk attitude than they thought while 31 per cent had a weaker risk attitude than they thought.
Those aged 18-24 were most risky while those aged 55+ were the most cautious, although they were also more likely to underestimate their risk appetite.
Mike Kellard, chief executive officer at AXA Wealth, an IFP sponsor, said: “Appreciation of risk is paramount in any client-adviser relationship. This difference between perceived and actual self is critical to understand; if individuals get this wrong, there is likely to be a knock-on effect and impact on investment behaviour, and in turn, likelihood in meeting financial goals.”
Prof Furnham said: “Money is a great source of anxiety for many people. If consumers are disconnected in their appetite for risk, it could have huge connotations for asset allocation decisions and growth expectations.”
The AXA Wealth Self study is part of a new AXA Wealth initiative to raise awareness of understanding risk.