Life cycle products are getting more and more attention from the market. In the past decade, not only life cycle product asset management and net inflows have recorded rapid growth, but life cycle products have become the default option for many pensions. In practice, life cycle products bring savings and pensions to different people through simple concepts.
Automation offer simplified solution for public
In different successful life cycle products, fund house offer solutions to solve the inconvenient issues for the public, especially in the pursuit of professional advice in many financial products. Mass market investment can also benefit from professional advice. Studies in the United States have shown that investor asset allocation is affected by investment choices provided by supplier. If investors have access to more stock choices, more stock assets will be allocated in the asset allocation, deviating from the ratio of the best stocks that match the investor’s risk appetite. More investors even want experts to teach the way. Therefore, lifecycle products are similar to the features of automated configuration, which provides investors with relevant information.
Investors often feel confusing in many investment products. Although traditional wisdom believes that more choices mean higher possibility match with the needs of different customers. But remember, it is subjected to economic theories of the free flow of information. Different people have different knowledge and experience in investing, so they may not make the right choice for themselves. More importantly, when investors are confused about different choices, a choice based on the well-known investment law seems to be better for investors without complicated experience. The world’s largest lifecycle product supplier offers only two-digit products. Their research found that over 50 percent people of polls invested in three or fewer products. One-stop automation services provide a better experience.
Simplify investor decision making
Despite the increasing public awareness of investment products, the number of financial products is growing faster. For the public, stocks and bonds are the two simplest categories of assets. The complexity of derivatives and underlying assets makes investors face the risks they are unwilling to bear. Lack of investment experience also makes the investor portfolio lack of diversification. After experiencing market volatility, the portfolio value is much lower than expected.
In addition, the public also lacks willingness and motivation to manage financial assets. More and more people are paying attention to immediate consumption and are not interested in saving and long-term investment. Insufficient incentives for investors will lack the time and effort to monitor and rebalance their portfolios. Standardized lifecycle products can easily follow investment theory, simplify investor decisions, and achieve savings goals.