Barometer of Investor Confidence: a snapshot of a Spanish citizen
The Barometer of Investor Confidence report was presented in Madrid today. It was produced by IE Center for Insurance Research, and promoted by Cecabank, the Spanish Chartered Accountants Association (Instituto de Censores Jurados de Cuentas de EspañaI/ICJCE), and INVERSIÓN&Finanzas.com.
The study analyses the environment and conditions surrounding people when they get into investing, as well as looking at the behaviour and experiences of those who already invest. One of the report's stand-out conclusions is that investors perceive banking institutions to present higher levels of solvency and professionalism, though auditors are at the top of the ranking when it comes to honesty and transparency. All entities got higher ratings for solvency and professionalism than they did for honesty and transparency.
The purpose of the report was to get a current snapshot of citizens' and investors' levels of confidence, to act as a guide for coming up with strategies to encourage families to save and invest. These are important questions for an ageing population, keen to maintain their level of income in their retirement or in the event of adversity or unforeseen events such as loss of employment.
For José Carlos Sánchez-Vizcaíno, Cecabank's Fund Depositary Director "making a concerted effort to protect families' investments is a responsibility all we financial entities and regulators share. The role of the depositary, still little-known, is key to guaranteeing adequate protection for holders of the most popular products: investment funds and pension plans”.
The most popular products held by investors are pension plans or funds (28% of families have one), followed by investment funds (17%), investments in listed shares (12%), savings insurance (11%), and fixed-income securities (5%). Investments in other products were minimal among the population analysed.
Investors only know an adequate amount about the products they invest in which suggests they are getting their financial knowledge by "learning by doing". This carries a risk in a field such as financial investment which is defined by high levels of volatility. Their confidence in financial institutions is somewhat higher than the rest of the population, although a large number of them were unaware of the functions and guarantees provided by some financial institutions operating on the markets - such as auditors or depositories.
The report concludes that the population and investors need to be equipped with better financial knowledge, and financial institutions should offer better guarantees of good practice. It suggests this would go towards reinforcing citizens' confidence in the financial system and would encourage a positive culture towards not just saving, but investment in particular. Following on from this the report points out that both financial authorities and public institutions, as well as private financial institutions and education providers, should take responsibility for drawing up strategies to bolster financial proficiency, and encourage responsible and healthy saving and investment habits among the general public in Spain.