Do investors have unrealistic expectations?

Over the years I have had the good fortune of working with many types of clients.?However, something I am seeing more of currently is their unrealistic market expectations from their investments.?Based on the fact that we enjoyed an unprecedented bull run since late 2009, and the quick economic recovery from March 2020, many clients are still expecting double-digit growth in their portfolios.?The 2021 Global Survey from Natixis Investments determined that the global average long-term expectation of an individual investor is 14.5% above inflation vs. financial professionals’ realistic long-term returns of 5.3% above inflation (for Canadian investors the difference is 11.2% vs. 5.1%)1.?The investors’ expectations are unrealistic.?Unfortunately, for the average investor to attain a return close to their expectations would require them to take on excessive risk which most investors are not equipped to handle.?What I have been doing is educating my clients and tempering their expectations so they will be satisfied with their returns.?We as advisors must be honest and realistic with our clients.?In addition, returns are not the only thing we concentrate on, there are many other areas such as tax and estate planning, and financial plans.?If your advisor is convinced that those results are attainable, you may want to get for a second opinion.?If your advisor is solely concentrating on your investments and not other areas to improve your financial well-being, you may want to get a second opinion.

1 https://www.im.natixis.com/us/research/2021-natixis-global-survey-of-individual-investors