Investor confidence peaks as general election beckons – London Business News | Londonlovesbusiness.com

A boost in investor confidence that correlates with the general election; a move towards ChatGPT as a trusted source of financial advice and the highest overall investor confidence figures since the report was launched in 2020 are just some of the key findings published today from the Investor Index – an annual study of UK investors.

Now in its fifth year, the Investor Index is an in-depth survey of investor behaviours conducted among 1100 UK adults (18+) with a minimum of £10,000 invested.

Conducted jointly by London-based communications agency AML Group and the research and planning experts, The Nursery, the study has established itself as a rigorous barometer of investor behaviours based on hard data.

Election optimism – 65% of all UK investors believe that a change in power will have a positive impact on their investments

2024 is the largest year for global democracy – with over 40 countries holding national elections. The UK general election will take place on 4^th July* and the opinion amongst investors that the Conservatives will lose (81%) is already having a significant impact on investor behaviours.

65% of all UK investors believe that a change in power will have a positive impact on their investments – with that figure rising to 85% amongst younger investors (18-44). Interestingly older investors (65+) are less convinced with only 30% sharing the view that the election will have a positive impact on their investments.

And when it comes to assessing the impact of the election on their financial futures – the youngest UK investors (18-34) remain the most optimistic with 68% believing that it will ultimately have a positive effect. Although they remain uncertain as to which party will be taking the leadership reins – with 51% unconvinced that it will be a Labour win.

“It is fantastic to see investor confidence reach an all-time high this year following a difficult economic period for all. The revival in confidence amongst younger investors particularly is a reassuring sign as they begin to invest more in the market” says Emma Harries, Account Director at The Nursery Research.

*Note: the study was conducted in April/May 2024, before the UK election had been called by the Prime Minister. At the time, the understanding was that there would be an election later in the year in October-November 2024.

Invested in AI

Cynicism, fear and distrust is still rife when it comes to AI – but the Investor Index 2024 can reveal that it is continuing to gain traction among UK investors as a go-to source for financial advice. And the biggest swing is among older investors – with 16% of 45-54 year olds stating that they have used ChatGPT for advice in the last year (up from 9% in 2023) and 8% of 55-64 year old investors – which is up from 3% in 2023.

And while current usage and sentiment remains mixed, future expectation of the growth in AI remains – with three-quarters (75%) of all UK investors believing that ChatGPT could provide reliable financial advice in the future – a rise of 3% year-on-year.

Conversely, Robo-advisors as a source of investment advice is falling – dropping 38% overall with the biggest shift among investors aged 35-44, recording a 50% decline. And when asked if Robo-advisors were the future of investing – just 17% of UK investors polled thought it was.

Aidan Williams, Strategist at AML Group said, “It’s clear that investors see the promise of AI in democratising financial advice in the future, but current usage remains low. The question is whether financial providers and regulators will effectively harness this technology or whether other solutions will be needed to meet the growing need for accessible advice.”

UK Investors are feeling confident

Confidence among UK investors is the highest it’s been since the study launched in 2020. The Index, based on a pre-pandemic confidence benchmark number of 100, currently sits at 105 – 17 points up from last year and 43 points up from the 2020 study that was carried out during the pandemic.

And there are a number of compelling factors that have signalled confidence among UK investors: 40% have increased the amount they invested in the past 12 months with 66% of investors thinking long term (up 10% from 2023) – and only 15% indicating that they are seeking short term investment opportunities. A clear sign that confidence has returned.

The study has also shown that interests are growing in investments that are less volatile and longer-term such as Government Bonds, increasing from 21% in 2023 to 26% in 2024 and property – increasing from 20% in 2023 to 23% this year.

“Investors have retained the self-reliance they gained navigating the past few years of seemingly constant crisis, with more doing their own research than ever before,” says Sarah Nunneley, Senior Strategist at AML Group “This confidence has also been emboldened by external market uplifts, creating not just a return in confidence, but a true revival. A new, more robust type of investor.”

Investing in Britain

66% of UK investors have stated that they would use the new British ISA, announced by Jeremy Hunt as part of the 2024 Spring Budget, when it becomes available – with that statistic rising to 79% among younger investors (18-34). Designed to encourage investment in UK companies with the proposal of an extra £5000 on top of the current £20,000 ISA allowance – it’s a new product that appears to have landed well – with 60% of younger investors seeing it as a strong investment opportunity.