A shift among UK retail investors towards traditional sources of financial advice has been unveiled in a recent study. The latest "Investment Forces" research, conducted by Charles Schwab UK, underscores this trend, revealing that nearly six in 10 (58%) of these investors now seek guidance from financial advisers and professional fund managers. This marks a notable departure from the previous inclination towards seeking advice from celebrities and social media-based 'Finfluencers'.

Investors Seek Reliable Guidance

As per the findings, 52% of investors refer to investment-related financial press before making changes to their portfolios, signalling a return to more established channels of information dissemination. This resurgence in reliance on traditional sources of financial advice comes amidst a backdrop of macroeconomic uncertainty and market volatility.

The report indicates that 80% of UK retail investors increasingly recognize the importance of managing their own investments directly to capitalize on fast market movements. However, a staggering 87% also acknowledge a deficiency in their financial knowledge to effectively navigate the current investment landscape. This acknowledgment of their limitations has prompted investors to seek out expert guidance to optimize their investment strategies.

A significant generational shift is observed, particularly among Gen X and Millennials, who historically exhibited a penchant for seeking advice from 'Finfluencers'. Since the end of 2021, the influence of social media influencers specializing in finance has seen a decline of 13% among Gen Z (from 50% to 37%) and 10% among Millennials (from 52% to 42%). Similarly, celebrities discussing their investments have witnessed a decrease in influence by 19% among Millennials (from 51% to 32%) and 10% among Gen Z (from 45% to 35%) during the same period.

In contrast, the majority (81%) of investors across all generations now deem it crucial to seek expert advice on their investment strategies, indicating a growing preference for reliability and expertise over influencer-driven recommendations.

Shift in Investor Behaviour

The study underscores a notable shift in investor behaviour, with a return to traditional financial advice channels fuelled by a desire for expertise and credibility in navigating the complexities of the current investment landscape. As market dynamics continue to evolve, investors appear to be prioritizing informed decision-making guided by seasoned professionals over the allure of social media influencers and celebrity endorsements.

Richard Flynn, UK Managing Director at Charles Schwab, said: “The current macroeconomic climate continues to shape the attitudes and behaviours of retail investors in the UK. Since we began this study at the end of 2021, domestic and international markets have experienced varying levels of volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term and uncertainty. It is therefore reassuring to see a rising – and notable – number of investors proactively seeking professional advice in order to make the most of their investments.”