The Great Expectations of Investment Return

August 02, 2021

Expectations are a double-edged sword in relationships. Everyone has them. When they are regularly met, relational life between two parties can be bliss. When they are consistently unmet, it can be a dumpster fire.

One popular therapist put it this way, “Expectations are resentments waiting to happen.”1


Another challenging aspect of expectations in relationships, is that one or both parties doesn’t always communicate them out loud. Well, the data is in for the investment world (from one survey anyway), and expectations that global individual investors and financial professionals have about future long-term returns have been communicated. Let’s just say, they are not the same.2

Recently, Natixis Investment Managers revealed the expectations that global individual investors have of their future investment returns. Guess what? They are, as the kids say nowadays, “to the moon” high. Coming in at about 14.5% above inflation. The financial professionals see it different. Very different. The pros see returns at—hold your breath—5.3%.

This could lead to some challenging performance discussions between wealth managers and their clients. So who do we believe? The great expectations of individual investors or the lower expectations of the professionals? I’ve said it before, and I’ll say it again, no one knows.

If the past is any indicator (and it’s not a predictor), stock market history has both wrong. Historical returns are more like 10%, and big swings in positive and negative directions are not out of the ordinary. One thing we do know is that human beings tend to gulp from the goblet of recency bias. When the financial crisis happened, the last thing some wanted was a stock. Now that market returns have been good for some time and meme stocks are shooting to the moon, inexperienced investors are becoming millionaires (good for them!) and stock-picking is hot again.

Of course, a survey is just a survey, and one investment professional might see potentials for investment return much higher than you do. Regardless of where you sit on that spectrum, consider your investment expectations, think through your biases, and communicate with financial professionals you trust about your financial plan.



1. Accessed online:

2. Below chart accessed online: