If scientists came up with a drug that lifted people’s mood, made them feel more positive about the future, and worked from day one, the discovery would be front-page news. But the treatment already exists. And, as ROBIN POWELL explains, it’s not a drug, but something as simple as starting to invest.
Our understanding of stress and depression has come on leaps and bounds in the past 20 years. There’s a wealth of information at our fingertips on evidence-based ways to boost your mood, whether its through mindfulness, CBT, or diet and exercise.
But is there still a trick that we’re missing? Is there something else that people could be doing to improve their mental wellbeing? A recent report by BlackRock suggests there is.
The latest Global Investor Pulse report is based on the world’s largest study on the relationship between wealth and general wellbeing. It was issued at just the wrong time, in early March, just as stock markets were plummeting. In more normal times it would have attracted far more attention.
Essentially it tackles that age-old question, Can money make you happier? The answer the researchers received from 120 in-depth conversions with people around the world was yes, it can. But not in the way you might think.
The report’s key takeaway, believe it or not, is the mood-boosting potential of investing. I don’t mean watching the markets go up and down like a rollercoaster as they have in recent weeks. That’s a sure-fire way of lowering your mood.
No, I’m talking about something as simple as opening an investment account.
Most people don’t invest at all
An astonishing 63% of British adults hold no market-based investments at all. That’s considerably higher than the global average for non-investors of 45%. 23% of Brits have no savings or investments at all, compared to 16% globally.
They have all sorts of excuses for not investing. 59% feel they don’t have enough money to invest. 39% say a lack of knowledge holds them back. 34% are worried about losing everything they invest.
Investors report multiple benefits
But the good news is that, once people start investing, their general sense of wellbeing improves by an average of 23 percentage points. They also feel 16 percentage points happier and 20 percentage points more fulfilled.
43% of new investors also feel more positive about the future, and the benefits accrue regardless of wealth, age, gender or life stage.
Even more encouraging is that new investors say the improvement in their mood is immediate.
Source: BlackRock Global Investor Pulse survey (2020) (Graphics by Visual Capitalist)
Encouragement for advisers
The BlackRock report also makes encouraging reading for financial advisers. 75% of those surveyed who use an adviser report having a positive sense of wellbeing.
Currently, however, fewer than 15% of British adults use an adviser.
Why is that? Well, fees are an issue for some potential clients, the report suggests, with advisers charging an average of £150 per hour. So too are investment minimums. Half of all surveyed advisers turned away clients with less than £50,000 to invest.
But the biggest problem, BlackRock suggests, is simply a lack of supply. There are only 26,700 advisers, each of them servicing an average of 100 clients. There simply aren’t enough of them.
What’s more, with around 15,000 advisers expected to retire by 2029, it’s going to get even harder for people to find an adviser who can take them on.
What are we waiting for?
Of course, these sorts of reports are always written for a reason. BlackRock is the world’s biggest asset manager. We shouldn’t be surprised that it’s encouraging more people to invest.
But it’s not just product providers who are producing research like this that connects financial wellbeing with mental and emotional health. The Money and Mental Health Policy Institute, for example, has reported similar findings.
For me, there are lessons — and big opportunities — here for everyone.
Governments needs to encourage saving and investing for all, not just to discourage reliance on state benefits, but also to help tackle mental ill-health.
Robo-advisers have a big part to play in encouraging people to start investing and making it as easy possible for them to do so.
Traditional advisers have a huge opportunity to serve larges swathes of the UK population who are currently unadvised. It will mean firms having to:
- adopt new technology to make dealing with clients with smaller portfolios more efficient;
- experiment with different charging models, so as not to deter potential clients with more modest incomes; and
- target younger investors, giving them what they want and need; the BlackRock report for example, shows that 97% of people between the ages and 18 and 24 think that financial education is very important.
None of these changes will be easy. But the rewards on offer to firms that do it right will be well worth the effort.
Finally, if you haven’t started investing yet, what are you waiting for? Not only will you increase your financial security, you might also be boosting your mental health as well.
Picture: Clint McKoy via Unsplash
