“Half of the adult population in Luxembourg lacks basic financial literacy,” noted , head of direct investing at Swissquote Bank Europe, during an event at Kinepolis Kirchberg on Tuesday 12 March 2024. Lauret was speaking at a presentation organised by the bank and the British Chamber of Commerce for Luxembourg to kick off Swissquote Investment Week.
The results of an released last year found that only 53% of adults in Luxembourg reached the minimum target score defined by the OECD to be considered “financially literate.” The average across OECD respondents was 39%, while in Germany--the top-ranked participant--75% of adults reached the minimum target score.
“We at Swissquote thought this isn’t quite good enough,” said Lauret. “Luxembourg is a major financial centre. There is more we can do to raise the level of financial education here in Luxembourg.” And here’s where Swissquote Investment Week comes in, he continued. The week’s main event--, which will take place on Thursday 14 March--will feature insights from financial experts on personal wealth management and key market themes for investors to keep an eye on in 2024.
“You have to commit to your plan”
At Tuesday’s kickoff event, Lauret highlighted the importance of “owning your financial future,” which, he argued, is made up of two concepts. “The first is, if you want to be successful and reach your financial objectives, you have to own those objectives. You have to understand what you’re investing for. You have to commit to your plan and you have to stay on track.”
“The second thing is the impact of costs on your financial performance. We all know that Luxembourg is an expensive country for services and products, and unfortunately, that also applies to financial services. Those costs, over the years, can really eat into the performance of your financial portfolio and get you further away from the objectives you’re trying to achieve.”
Focus on factors that you can control
When it comes to having a financial plan, “the key thing” is “focusing on the factors that you can control,” said Lauret. “Nobody can really predict where markets are going to go tomorrow, the day after tomorrow or next year. So you have to focus on what is within your span of control.”
There are three points that are investors are “firmly” in control of. “The first one is: how are you going to invest? Are you going to invest on your own, or do you need an advisor to help you?” Almost all investors--98%, according to Lauret--invest without the help of a financial advisor, and that’s the result of two things. “The first one is, financial advisory is out of reach for more and more people.” Private banks, for instance, can require an account balance of several million euros for clients to get access to advisors.
More people have been able to manage their portfolios in real time, access financial research, access financial information and take the management of their portfolio into their own hands
“The other driver of this is technology,” said Lauret. “As financial management has moved online, more and more people have been able to manage their portfolios in real time, access financial research, access financial information and take the management of their portfolio into their own hands.”
“There are some cases, however, where a financial advisor makes sense,” he added. These can include a lack of time, desire or interest in managing investments. But an advisor can also be useful for people who have difficulty managing their emotions. “Some people have trouble sleeping at night, some people will sell at the wrong moment because they get too involved in the volatility of financial markets. That’s another good reason to seek the support of a financial advisor that can hold your hand in these difficult moments.”
The third reason for seeking a financial advisor is if “you’re fortunate enough to have complex financial matters, and you need support to help you with tax planning, estate planning and so on.”
“Ultimately all about setting investing goals”
The second point that investors control is “owning their investment plan,” said Lauret. “A lot of people do this on their own. There’s a lot of resources online or in books where people find the support that they need.”
“It’s ultimately all about setting investment goals. If you have a clear vision of your goals, you will be able to stay on track more confidently, make a plan to invest regularly and not be fazed by short-term movements in the markets.”
And the third point, concluded Lauret, is choosing an investment provider. When doing so, it’s important to keep an eye out for custody fees on portfolio investment, trading commissions or transaction fees, and retrocession fees (a portion of the annual management fees on investment funds that are paid back to the bank that sold the fund).
Swissquote Investment Day is open to the general public. Find more information and get your ticket .