Up to a third of DIY investors regret making their own decisions

New research has shown many DIY investors regret making their own decisions rather than using a financial adviser.

The research, by insurance giant, Prudential, found that up to 25% of investors who opt for the DIY approach, rather than taking advice, later regret their decisions; for investors with larger sums of money, above £10,000, the number rose to a third.

Interestingly, the most common regret related to investment losses, although 20% were unhappy with the risk they took when investing and a similar number failed to get returns to match their expectations.

DIY or advice?

Financial consumers in the UK have two options; to take advice from an adviser or opt for the ‘do it yourself’ approach.

Whilst people who use advisers, and most experts would recommend seeing an Independent Financial Adviser (IFA), have to pay for the advice they are given through fees, (although commission is still an option for some insurance related products) DIY investors don’t.

However, it appears that a large percentage of DIY investors later live to regret some of the decisions they made, with the Prudential calling it a “flawed costly strategy” if the investor does not have the right knowledge, experience and expertise.

Over the past few years most experts agree that the ‘DIY’ market has increased in size, whilst the number of people using advisers has fallen, possibly due to the cost of taking advice.

However, the results of the Prudential’s survey clearly show it is the DIY investors with suitable knowledge and experience who produce the best results. The decisions which were regretted by investors, for example in relation to risk and investment returns, were mainly those which could have been addressed through additional education and experience.

Andrew Barker, Head of Advice at Prudential Financial Planning, said: “All investing carries some level of risk, which means that decisions on where to put your money won’t always give the return expected. But investment regrets can often be avoided if people make sure they fully understand all the vital considerations before making their decision.”

Barker continued: “DIY investing is really only appropriate for people who have very good knowledge of financial products and markets. Our advice to those considering making their own investment decisions is to think carefully about the potential long-term cost implications.”

He added: “DIY investing may seem cheaper initially than paying for professional financial advice, but without the necessary expertise it could turn out to be a flawed and costly strategy.”

Reacting to the survey, experts pointed out that clearly a large percentage of DIY investors were happy with the decisions, but that to be a successful DIY investor can take a significant amount of time, requires dedication, knowledge, experience and often a little luck!