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Investors making emotional decisions in turbulent markets tops advisors' concerns, says Natixis survey

UAE. A recent report surveying 150 financial advisors in the UAE – part of a larger Natixis global study of 2,400 advisers in 14 countries across the globe – has revealed that investors making emotional investment decisions in turbulent markets is the top mistake advisors see among individual investors.

Advisers are concerned that individual investors tend to be too focused on short-term market events, leading them to make irrational investment decisions. When asked which the biggest mistakes were being made by individual investors, they highlighted the following:

– Making emotional investment decisions
– Focusing too much on short-term market noise and sentiment
– Failing to have a financial plan in place
– – Keeping too much cash
Not setting clear financial goals

“Given today’s market complexity, the role of advisers has become critical to helping investors set long term goals and stick to them. Being consistent is the key to avoid making rash investment decisions”, explains Terry Mellish, head of global institutional services and Middle East North Africa business at Natixis Global Asset Management.

Changing demographics

The Natixis survey also shows that advisors across the Emirates are increasingly aware of the need to tailor their offerings to the unique needs of rising powerful demographics such as millennials and women investors. More than eight out of ten (84% UAE, 82% globally) advisors agree that establishing a relationship with millennials is critical to their success. And they think that women investors will represent 40% of advisory clients in the UAE by 2018.

Advisors in the UAE, however, are confident in their ability to cater to such groups. Nearly four out of five (79%) believe they have adequate tools to support such demographics, and 55% (60% globally) believe that those able to attract younger clientele will grow faster in the long-term compared with financial advisors who only service older clients.

As the technology-savvy millennial generation become increasingly influential, automated advice is something which advisors now need to be aware of. However, only one in four (23% UAE, 22% globally) of advisors in the UAE think that ‘robo-advice’ has the ability to eventually make traditional financial advisory methods obsolete. For advisors, it really is a perfect opportunity to show how much of a difference they can make at coaching their clients through tough times.

Shifting portfolio trends and the rise of alternatives

Looking at the opposite end of the spectrum, retirement portfolios were found to be a challenge for local investors, with 52% of advisors in the UAE (53% globally) saying that generating sufficient income to fund personal life goals beyond basic needs is difficult.

“Clearly, the investment landscape is changing, but advisors are up to the challenge. Complex and changing markets are forcing advisors to rethink the role of alternatives and the mix of active and passive investments in their portfolio strategies,” concludes Terry Mellish.

Seventy nine percent of UAE advisors (77% globally) consider the 60/40 approach outdated, and 63% (63% globally) see the need to replace traditional diversification and portfolio construction tools.

Despite challenging markets, UAE-based advisors expect business growth of 15.7% on average in the next 12 months. In the UAE, 49% of advisors anticipate market performance to be an important driver of growth (45% globally). However, advisors accept there are potential factors that could hinder growth.

Amongst the macro barriers hindering current business, the biggest factor is seen as assets withdrawn from departing clients, highlighted by over half of the advisors within the UAE, at 57 percent. (44% globally) Market performance and regulatory change were also seen as major contributing factors with 32% and 20% respectively.

Research Methodology
Natixis’ 2015 financial advisor research was conducted online in June 2015 with 300 financial advisors in the United States. The survey is part of a larger global study of 2,400 advisors in 14 countries from Asia, Europe, Latin America, the Middle East, the United Kingdom and the Americas.

For more information, visit http://durableportfolios.com.

Photo Caption: Terry Mellish, head of global institutional services and Middle East North Africa business at Natixis Global Asset Management

About Natixis Global Asset Management, S.A.
Natixis Global Asset Management, S.A. is a multi-affiliate organization that offers a single point of access to more than 20 specialized investment firms in the Americas, Europe and Asia. The firm ranks among the world’s largest asset managers.[1]

Through its Durable Portfolio Construction® philosophy, the company is dedicated to providing innovative ideas on asset allocation and risk management that can help institutions, advisors and individuals address a range of modern market challenges.

Natixis Global Asset Management, S.A brings together the expertise of multiple specialized investment managers based in Europe, the Americas and Asia to offer a wide spectrum of equity, fixed-income and alternative investment strategies.

Headquartered in Paris and Boston, Natixis Global Asset Management, S.A.’s assets under management totaled $904.3 billion (€811.6 billion) as of June 30, 2015.[2] Natixis Global Asset Management, S.A. is part of Natixis. Listed on the Paris Stock Exchange, Natixis is a subsidiary of BPCE, the second-largest banking group in France.

Natixis Global Asset Management, S.A.’s affiliated investment management firms and distribution and service groups include Active Investment Advisors;[3] AEW Capital Management; AEW Europe; AlphaSimplex Group; Aurora Investment Management; Axeltis; Capital Growth Management; Darius Capital Partners; DNCA Investments;[4] Dorval Finance;[5] Emerise;[6] Gateway

[1] Cerulli Quantitative Update: Global Markets 2015  ranked Natixis Global Asset Management, S.A. as the 17th largest asset manager in the world based on assets under management $890.0 billion as of December 31, 2014.
[2] Net asset value as of June 30, 2015. Assets under management (AUM) may include assets for which non-regulatory AUM services are provided. Non-regulatory AUM includes assets which do not fall within the U.S. Securities and Exchange Commission’s definition of ‘regulatory AUM’ in Form ADV, Part 1.
[3] Division of NGAM Advisors, L.P.
[4] A brand of DNCA Finance.
[5] A subsidiary of Natixis Asset Management.
[6] A brand of Natixis Asset Management and Natixis Asset Management Asia Limited, based in Singapore and Paris.

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