An OECD study for the AMF profiles new French retail investors

In order to gain a better understanding of retail investors who have started to invest in the markets since 2020, the Autorité des Marchés Financiers (AMF) has requested the support of the European Commission, which has designated the Organisation for Economic Co-operation and Development (OECD) to assist it in its efforts to target this audience. The study published by the OECD shows that these new, younger investors, half of whom have invested in crypto-assets, get more information from social media and tend to overestimate their financial knowledge.

The first part of this cooperation with the OECD is a field survey, conducted by the Audirep Institute in April 2023, and financed by the European Union through the Technical Support Instrument (TSI) of the Directorate-General for Structural Reform Support (DG REFORM). The study was based on a large sample of over 8,000 people, and included interviews with over 2,000 retail investors, of which over a thousand had bought investment products for the first time in the last three years.

The first finding of the study is that almost one in four French people claim to hold an investment in financial instruments or crypto-assets. Half of these investors, i.e., 12% of the adult population of France, began investing after the start of the COVID-19 pandemic. The majority of these new investors are men (64%), under 35 (56% compared with 21% of "traditional" investors). The proportion of women is higher than among traditional investors. These new investors mainly live in urban areas and have a higher level of education, income and assets than the average French person. However, there are more employees, blue-collar workers and students in this group than among traditional investors.

Three quarters of these new investors hold more than one investment product. Half have invested in crypto-assets, compared with 25% of traditional investors. Euro-denominated life insurance is the second most widely held product (33%), followed by retirement savings products (29%) and shares of listed companies (24%).

Their investment horizon is shorter: two-thirds are looking less than 10 years ahead (compared with 37% of traditional investors). Their main reasons for investing are to increase the profitability of their assets and to diversify them, but also out of curiosity (29% compared with 18% of traditional investors) or for pleasure or fun (18%). In addition, 89% of them gamble regularly or occasionally (sports betting, lottery, casino). Another clear motivation is the desire to invest in sustainable products, cited first by 18–24-year-olds.

When choosing investments, these new investors consult product documents, friends and family and the specialised press, as well as social media, which is the main source of information for 18–24-year-olds (41%), and influencers. A small proportion (7%), particularly those from more modest backgrounds, seek no advice or information before investing. The type of sources consulted seems to correlate with the level of financial knowledge.

The survey shows that these new investors are overconfident about their level of financial knowledge, with 73% of 18–24-year-olds, 75% of 25–34-year-olds and 67% on average (compared with 58% of traditional investors) believing it to be "high". When asked about simple concepts such as the effects of inflation, diversification or the risk/reward relation, more than half of the youngest respondents answered only two out of six questions correctly.

While "earning a lot of money quickly" with their investment is the priority for 73% of those surveyed, the majority express a preference for products with moderate risk and return (61%) and their perception of risk seems limited.

These results were used to define four investor profiles ("Neophytes", "Uninformed", "Dynamic" and "Conscientious") selected to conduct 40 individual interviews designed to explore their motivations and need for support. The expectations expressed in terms of information are content from a reliable source that is clear, practical, targeted, interactive and fun ("gamified").

On the basis of this survey, the OECD will draw up a proposal for a financial literacy strategy targeting these new retail investors for the AMF, detailing the behaviours to be encouraged, the appropriate channels and the relevant content. This proposal is expected in the first half of 2024.

"This profile of new French retail investors, produced by the OECD for the AMF with the support of the European Commission, is a key element in guiding our educational initiatives as part of our mission to protect investors," said the AMF Chair Marie-Anne Barbat-Layani.

About the AMF
The AMF is an independent public authority responsible for ensuring that savings invested in financial products are protected and that investors are provided with adequate information. The AMF also supervises the orderly operations of markets.Visit our website https://www.amf-france.org/en