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Investors say they need 9.7 percent returns to meet goals

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Individual investors in 17 countries polled by Natixis Global Asset Management in February said they looked forward to continued strong returns on their investments.

Eighty percent of respondents expected to do as well this year as last, if not better, and large numbers said equity markets would be this year’s top performers.

The survey suggested, however, that investors’ optimism may be leading to unrealistic expectations.

In the new survey, investors believed that the average annual return they would need to meet their goals was 9.7 percent above inflation, compared with the 9 percent they anticipated in Natixis’s 2014 survey.

“Investors have gotten used to excellent stock market returns in the last few years, so their view of financial markets is notably positive,” John Hailer, the firm’s chief executive for the Americas and Asia, said in a statement.

“At the same time, many investors remember seeing significant losses in their portfolios after the global financial crisis. The missing piece is that many haven’t really planned, or prepared themselves emotionally, for another market setback.”

This year’s survey found investors more conflicted between chasing performance and protecting capital than they were two years ago.

The number who said they would choose safety over high returns also increased, to 84 percent this year from 78 percent in 2014.

Resolving their conflicted feelings won’t come easily, the survey found, as many investors appear to rely on broad return assumptions and emotional measures of risk that could undermine their success.

Fifty-seven percent of respondents said they had no financial goals, 67 percent had no financial plans and 77 percent said they relied on gut feelings to make investment decisions.

Retirement emerged as the chief priority of investor respondents around the world. But whether they will get it right was an open question.

Despite their lack of plans, 66 percent of investors asserted to pollsters that they knew how much income they would need for retirement — 63 percent of preretirement income on average, way off the 75 percent to 80 percent used in many planning scenarios, according to Natixis. 

The study found investors apparently aware of challenges from today’s markets, and open to different investment approaches.

Sixty-nine percent said they believed a traditional stock and bond portfolio would no longer suffice to pursue returns and preserve capital. This could lead many to consider of alternative investment options, Natixis said.

However, investors want more information before they go that route. Seventy-six percent of respondents said they would consider some form of alternative investments if their advisor recommended it.

Natixis noted that a new kind of advisory relationship was emerging to address these challenges. Now, the advisor will serve more as a coach, helping clients make better-informed investment decisions and educating them about investing and the markets.