The Report presents evidence on the investment choices of Italian households with the aim of gaining insights as to how they manage investment decisions and the main risks they may take.
The Report is based on the Survey ‘The approach to finance and investment of Italian households' administered by GfK Italia to a representative sample of Italian retail financial decision-makers.
The 2020 Report contains two sections focused on knowledge and attitude towards SRIs and attitude towards digital assets and financial services, respectively.
The macro environment and trends in household wealth and savings ... more
The outbreak of the Covid-19 pandemic early in 2020 has had severe health, social and economic consequences at a global scale, which are expected to worsen following the second wave of infections hitting many countries in the second half of the year (Fig. 1.1 - Fig. 1.2). In many jurisdictions the confinement measures adopted to stop contagion impaired the labor market, with negative repercussions on household disposable income and consumption (Fig. 1.3 - Fig. 1.5). In Italy, similarly to the main euro area countries, both composition and uses of household income recorded a sudden change in the first quarter of 2020, showing a decrease in wages and salaries only partially offset by a rise in social transfer, along with a fall in consumption and a significant growth of precautionary savings (Fig. 1.6 - Fig. 1.7). The outburst of the crisis impacted also on household holdings of financial assets, strengthening the long-lasting trend of an increasing preference for liquidity to the expense of bonds, equities and fund shares. In Italy the shift towards cash and deposits fits in to a context characterised by household per capita financial investments significantly lower than those recorded in other main Eurozone countries (Fig. 2.1 - Fig. 2.6).
The health crisis is exacerbating the significant challenges posed to many economies by ageing population and digital transformation (Fig. 2.7 - Fig. 2.11). In Italy the median age is around 47 years, compared with 44 years in the EU, while the percentage of population aged 65 and over is higher relative to the European average and is forecast to increase up to 26% in 2029. As for digitalisation, Italy continues to lag behind the main European countries as of human digital skills and (to a lesser extent) use of the Internet, despite the progresses made in the last five years in terms of connectivity tools.
Financial knowledge and interest towards financial education initiatives of Italian households ... more
The survey data of the CONSOB Observatory on ‘The approach to finance and investment of Italian households' show that financial basic knowledge has slightly risen over the last two years (Fig. 4.1 - Fig. 4.4). More than 20% of individuals seem to be prone to an over-valuation of their financial literacy (as stemming from the comparison between perceived with actual financial knowledge), while the propensity to revise misconception on one's own literacy is low (Fig. 4.5 - Fig. 4.10).
When making an important financial decision, about 60% of respondents declare to be willing to try to learn more, although some of them would also rely on advisors and trustworthy people and 15% of the sample is not able to identify a point of reference (Fig. 4.12). Interestingly, financial advisors are the most mentioned leading figure, followed by relatives and friends and institutional websites. As for the topics, investing arouses the highest interest, while about 20% of the sample don't know what to answer. Intermediaries and financial advisors are most frequently identified as potential promoters of educational initiatives, followed by public institutions (Fig. 4.13). Most of the interviewees prefer face-to-face and online lessons, although about 30% of the sample doesn't answer (Fig. 4.14). When it comes to the appreciation of a tool that could help in the daily management of personal finances, such as an app for household budget, only 33% of respondents declare to be interested, beyond the tiny proportion of those already using it.
With regard to financial planning, 60% of interviewees has not ever had a financial plan, while slightly more than 40% state to have a budget that they respect, either always or occasionally (Fig. 5.1 - Fig. 5.2). Attitude towards planning seems to be even lower when referred to retirement, as less than 20% of respondents assert to know (precisely or broadly speaking) how many years they have to work before retiring, how much they are going to get monthly and how much they should save to maintain the current standard of living (Fig. 5.3 - Fig. 5.4). As for saving, more than 60% of respondents state to save (either regularly or occasionally), mainly to face unexpected events (Fig. 5.5).
As for financial vulnerability of Italian households, about 30% of respondents declare they might not be able to cope with an expected expense of 1,000 euros, while 31% has recorded a decrease in their income (either temporary or permanent) over the last year (Fig. 5.7). Economic fragility may be further exacerbated by the Covid-19 crisis. As of June 2020, 35% of respondents declare to have reduced their expenses due to the pandemic, more that 10% of interviewees have dipped into their savings, whilst 45% of them did not report any change in their habits (Fig. 5.9). Nonetheless, there is widespread pessimism about the economic recovery, that in most cases is expected after 2022.
Investment and demand for financial advice ... more
In 2020 participation in financial markets has slightly increased relative to the previous year, involving around 34% of households (Fig. 6.1 - Fig. 6.2). After bank and postal savings, the most frequently held products are mutual funds and Italian government bonds. The main deterrents from investment are the lack of savings followed by the lack of trust and of knowledge, both by far less frequently mentioned (Fig. 6.3). As for investment styles, reliance on professional support (i.e. financial advice and portfolio management) significantly increased from 30% in 2019 to around 41% in 2020, to the expense of self-managed decisions down from 40% to about 29% (Fig. 6.7 - Fig. 6.8). While 85% of investors monitor their investments, 49% do it more than twice a year and 11% more often than usual during market turmoil. About half of the investors monitor their portfolio alone (Fig. 6.11).
FOCUS: Knowledge and attitude towards SRIs ... more
The outbreak of the pandemic has increased the interest in ESG products. In Italy since March 2017, Borsa Italiana has identified a list of instruments (Green and Social Bonds List) issued in order to finance projects with environmental and/or social goals. After the increase recorded in the last years, in the first nine months of 2020 ESG issuance growth has shown a further speed-up (Fig. 7.7 - Fig. 7.9). However, Italian retail investors do not seem to be aware of ESG products yet. The 2020 Observatory on ‘The approach to finance and investment of Italian households' show that about 60% of respondents report to be not informed on social responsible investments. In addition, only 5% of investors hold ESG investment products: the proportion rises to 18% among informed advised investors, who declare to have been recommended such investments by their advisors in slightly more than 10% of cases (Fig. 7.1 - Fig. 7.5).
FOCUS: Attitude towards digital assets and financial services ... more
Digitalisation is perceived as already part of one's daily life, with more than 70% of the sample regarding it as an opportunity, leading to a better quality of life. However, a proportion ranging from 46% to 59% of interviewees unveils concerns about complexity and data protection which may prompt anxiety. In addition, the web is generally perceived as a source of information, even though about 50% of individuals have a hard time finding useful pieces of information among all those available (Fig. 8.1 - Fig. 8.4). The use of the Internet for financial matters is reported by a proportion of interviewees ranging between 8% (information gathering) and 42% (online banking), as compared with 52% of the sample navigating social networks. Knowledge and use of some digital financial products or services (i.e., trading online, crowdfunding, robo advice and crypto-currencies) still remain little diffused, although the possibility to invest small amounts might make them attractive to the more sophisticated investors (e.g., with higher financial and digital literacy; Fig. 8.5 - Fig. 8.9).
The Report was prepared by: Nadia Linciano (coordinator) - CONSOB, Head of the Economic Studies, Research Department (email@example.com) Valeria Caivano - CONSOB, Economic Studies, Research Department (firstname.lastname@example.org) Daniela Costa - CONSOB, Economic Studies, Research Department (email@example.com) Monica Gentile - CONSOB, Economic Studies, Research Department (firstname.lastname@example.org) Paola Soccorso - CONSOB, Economic Studies, Research Department (email@example.com)
The opinions expressed in the Report are the authors' personal views and are in no way binding on Consob.