Finance education: a way to overcome cultural defiance and expand client base
Financial literacy remains low across Europe, with many citizens viewing finance as overly technical and unappealing. Risk aversion is widespread, particularly in Southern Europe, where people are highly reluctant to invest in uncertain markets, preferring to avoid risking their savings. Social and income differences also shape financial engagement. Wealthier individuals are more inclined to invest, while lower-income groups, with less disposable income, tend to have limited financial exposure, mostly interacting with their local banks.
Banks focus mainly on account operations, loans, and savings, and their staff are often not equipped to offer investment advice. Seeking specialized guidance requires effort, knowledge, and motivation, which only a small fraction of the population is willing to do.
The investment industry has also largely neglected retail investors, preferring to focus on large institutions and wealthy clients. This inward-looking approach leaves the world of finance disconnected from the average private investor. Yet, financial education presents an opportunity for asset managers to expand their client base and grow assets. To succeed, asset managers must raise brand awareness and engage the general public, many of whom are unfamiliar with even the top firms. Providing accessible educational resources can be crucial to overcome cultural resistance to large financial institutions.
Collaboration with banks is essential for success, with asset managers offering training programs and materials to bank staff to help them better educate and advise their clients. Recent trends, such as the rise of online platforms, cheaper and more flexible products like ETFs, and thematic investments (e.g., environmental, mega-trends or small-cap investments), offer opportunities to engage non-professional investors.
Asset managers must also simplify their product offerings and adopt a long-term strategy focused on education. Additionally, they may face competition from large online retail platforms, which are better positioned to capture retail markets that largely untapped for investment products. These platforms, however, could become valuable partners due to their strong consumer trust and brand recognition.
