EFAMA looks at why Europeans have stopped savings for the future
A survey conducted by the European Fund and Asset Management Association (EFAMA) has identified lack of trust, market risk and poor performance as the trio of reasons for a drop in long-term savings.
Two thirds of the survey respondents consider these three main reasons to be behind the steady drop in household savings through financial assets, discernible across Europe.
Claude Kremer, president of EFAMA, said: “Holdings of investment funds via retirement savings has continued to rise since 2008 but the overall acquisition of financial assets has fallen with demand for investment assets taking a big dip.
“This retreat from direct acquisitions of investment assets raises many questions about the causes, remedies and potential impact on economic growth.”
The survey addressed these issues with senior asset management experts at 46 of EFAMA’s corporate members, one associate organisation and 10 associations.
A total of 57 respondents were polled in 21 European countries.
The majority agreed retail investors needed better education and advice to improve trust in investment products and highlight the benefits of long-term investing.
Kremer said: “The industry believes that rebuilding trust with retail investors will come through the promotion of long-term savings, which have the ability to generate higher returns than short-term savings.
The industry must work to educate investors at the distribution level about the need to extend their investment horizon.”
Over 70% of respondents thought the best way to achieve this is through dialogue with authorities at EU and national level, while nearly 60% believe the industry should create a common information initiative to raise awareness of the benefits of long-term investments.
Asset managers can also contribute to the cause, respondents though.
In particular, they can create incentives for retirement savings by offering a greater range of long-term savings products.