The Cyprus Securities and Exchange Commission (CySEC ) published the results of a survey that established the behavior of retail investors. It provided a clearer picture of the decision-making process of retail investors. Additionally, it highlighted the challenges regulators are facing in protecting investors.

CySEC Studies the Behavior of Retail Investors

The survey focused its questions on the investors’ decision to invest in a product and how they researched the product and the investment platform.

For the survey, the regulator questioned people who invested in varying frequencies. Among all respondents, 25 percent traded financial products every month, whereas 19 percent invested in these products within 4 to 6 months and another 17 percent took the plunge on a weekly basis.

The study found that about 22 percent of retail investors made their investment decision based on digital promotions and celebrity endorsements, whereas 42 researched the products and another 37 percent depended on recommendations from friends and family. Only 31 percent of the investors sought advice from financial experts.

In contrast, 48 percent of French and 34 percent of British and German investors sought advice from financial experts. However, in the UK, 24 percent of retail investors decided on product promotions compared to 14 percent in both France and Germany.

Blind Trust in Finfluencers?

Further, 31 percent of respondents to the CySEC survey make financial investments based on the advice of a financial influencer on ducts. With platforms such as TikTok, YouTube, Instagram, and Twitter. In France, such decisions go as high as 42 percent, while only 24 percent of Germans rely on fin-influencers and 34 percent in the United Kingdom.

“Social media now has a direct influence on investment decisions, but not all the information can be trusted,” a CySEC spokesperson said.

“Too many investors including young people are taking real risks with their money because they are taking advice and recommendations from unreliable sources, ranging from family members and friends to celebrity endorsements on social media platforms, without properly checking out the entity they’re buying from.”

Moreover, the survey concluded that only 25 percent of the investors in Cyprus spent 6-7 days researching a particular product, whereas 7 percent did it for less than 30 minutes. Moreover, 26 percent of Cypriot investors had invested more than they could afford to lose. Also, more than 34 percent of the respondents showed buyer’s remorse, meaning they regretted their investment.

The Cypriot regulator highlighted that financial market supervisors should “play a much greater role to enhance their ability to protect investors.”

“The patterns identified by our survey were identified across a range of countries and investor groups, demonstrating an opportunity for national authorities to work together to raise awareness of the tools available to investors and to signpost information that will help them make informed decisions,” the spokesperson added.