While the financial industry often approaches goals-based investing from a technical or mathematical standpoint, InvestSuite contends that addressing the human needs and psychology behind goal pursuit is a true differentiator.
This informs the basis of InvestSuite’s recent research on goal-based investing trends in the Nordic region. The concept of goals-based investing relates closely to several of InvestSuite’s solutions. Be it their Robo Advisor which serves as an accessible stepping stone for those seeking automated investment assistance or their reporting tool, StoryTeller, which provides a human touch by presenting a narrative of portfolio performance and key events, their ultimate vision is to help investors stay engaged, involved and motivated in their goal pursuits.
InvestSuite collaborated with Dr. Klaus Harnack, author of ‘The trust mandate’ to embark on comprehensive research by leveraging insights from behavioral studies to explore the trends in goals-based investing. Conducted across Europe, including Denmark, Sweden, Finland, and the United Arab Emirates, this research has yielded valuable insights from the responses of thousands of participants. Bart Vanhaeren CEO and Co-Founder of InvestSuite and Sven Moons, Customer Insights Expert at InvestSuite share some of the key findings of this research and explain their implications on both InvestSuite’s vision and its offerings.
“We discovered that in Europe, particularly in Denmark, goals tend to be more general and lacking in specific details. However, in the Emirates, we observed the opposite, with individuals being much more specific about what they want to accomplish.”
Sven Moons, Customer Insights Expert at InvestSuite
Some notable insights from the Research:
One notable finding from InvestSuite’s research relates to the specificity of investment goals. As per psychological theories on goal pursuit, setting specific and challenging goals tends to enhance task performance, making it easier to track progress and stay motivated.
“We discovered that in Europe, particularly in Denmark, goals tend to be more general and lacking in specific details. However, in the Emirates, we observed the opposite, with individuals being much more specific about what they want to accomplish. This disparity presents a challenge for European financial institutions, as vague or otherwise ‘fuzzy’ goals may hinder progress towards desired outcomes,” shares Moons.
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Another significant finding is on the time horizon of goals. “More than half of the people in the Nordic region expressed uncertainty about their time horizon, with an additional 24% stating only ballpark estimates of five or ten years. Specific dates for achieving goals were rare,” adds Moons. So, when it comes to goal-based investing, it is important for financial institutions to emphasize the importance of defining time horizons during the onboarding process. This would involve encouraging individuals to consider their time frame together with their desired outcomes, risk tolerance and other variables, so as to help them establish clear objectives.
“Unlike other platforms that offer a wide range of 20-30 goals for users to choose from, InvestSuite aims to offer specific goals to avoid overwhelming users with an excessive number of options that may confuse them,”
Bart Vanhaeren CEO and Co-Founder of InvestSuite
The research also explored the psychological concept of implementation intentions. Forming implementation intentions is a tactic that involves specifying the behavior one will perform in the service of a goal and the situational context in which one intends to perform it. They are usually described as ‘if-then’ scenarios. Such as, ‘If I receive my salary, then I will invest 5% of it in my fund’ or ‘If there is a market correction and stocks are cheaper, then I will put more money into my investment account’.
“By getting investors to first commit to certain implementation intentions and then sending them cues as opportunities to react, financial institutions can automate good investment behavior. The kind that helps them achieve their goals without too much hassle or need for self-control” reveals Moons.
Key Implications on InvestSuite’s vision and strategy
InvestSuite is integrating insights from Sven’s research into their solutions to continuously improve their solutions and offer a more user-friendly and effective investment experience for their clients. “Unlike other platforms that offer a wide range of 20-30 goals for users to choose from, InvestSuite aims to offer specific goals to avoid overwhelming users with an excessive number of options that may confuse them”, shares Vanhaeren.
This recent study on goals-based investing has also highlighted the importance of personalized strategies for financial institutions. Rather than adopting a one-size-fits-all approach, institutions should prioritize understanding each client’s unique needs and preferences. This tailored approach ensures better outcomes and fosters deeper client relationships. “So, for instance, the research also revealed that people in the Emirates prefer short-term investments in contrast to people in Europe where longer-term and potentially safer investments are more appealing, Investsuite gleans from this information to offer different investment portfolios tailored to specific horizons and preferences of users in different regions,” highlights Vanhaeren.
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They are also focusing on engagement, recognizing that investors appreciate staying involved. “While long-term investors don’t require constant updates, we plan to provide regular news and information on portfolios. We may also suggest actions such as opening a portfolio for their family or updating their risk profile. We understand that posing too many questions can lead to user fatigue so we’re mindful of striking the right balance,” affirms Vanhaeren.
The findings from this research are integral to InvestSuite’s design process influencing both significant and subtle aspects of its platforms. “Research insights even guide us in determining the placement of buttons, such as the withdrawal button in an investment app, which turns out to be considered very important by users” adds Vanhaeren.
The Way Forward
Looking ahead, InvestSuite has an exciting initiative in the works- a goals-based feature in collaboration with Franklin Templeton. This joint venture, catering to clients in the Middle East, Europe, and the Nordics, aligns closely with their ongoing research and aims to assist individuals in achieving their specified financial goals. “Through this partnership, we’re developing a Robo Tracker that allows users to set quantifiable goals. The Robo Tracker monitors their progress, provides recommendations if they veer off track, and offers actionable steps to realign with their goal. It will definitely provide users with a clear path toward their financial objectives, enabling us to guide them and support them throughout their investment journey,” concludes Vanhaeren.
