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Fear of losing their money is stopping consumers from investing their cash, finds TISA research

Support services offered by the industry are inadequate for the help and reassurance that consumers need to invest, TISA research reveals.

New research commissioned by The Investing and Saving Alliance (TISA), the cross-industry financial services membership body, and undertaken by EY Seren, identified a striking hesitancy among consumers to invest their savings. The findings were particularly stark among Millenials and Generation Z savers, but affected all age demographics.

A significant minority of those surveyed inherently believe saving is “the right thing to do” (44%), and many say the same about investments (25%), but consumers are afraid of taking risk with their money and are struggling to find appropriate and personalised support and reassurance. In the study, 47% cited “the risk of losing money” as a reason they are reluctant to invest, and 34% said the same about choosing a savings product.

The top sources that consumers turn to for information on savings and investments, according to the research, are either: 1) online resources; 2) friends & family; and 3) online forums.  Unless provided by regulated firms, online support is unreliable and can steer consumers towards highly risky investments or scams, further tainting the very idea of investing for risk-averse consumers. Regulated financial advice does offer a solution but is viewed as expensive and the preserve of the wealthy.

TISA believes current financial advice regulations need to be amended to allow the financial services industry to provide a more personalised form of guidance to consumers. A much wider availability of online tools from financial services firms would provide consumers, particularly younger savers, with the confidence to make important decisions around investments. 73% of those surveyed would appreciate “access to a savings tool which makes it quick and easy to input data and select relevant savings products”. 63% said the same about choosing a relevant investment product.

Simple, personalised online tools from financial services firms have great potential to help consumers gain a better understanding of both the benefits and the actual risks of various savings and investment products and behaviours. While such tools will never replace comprehensive financial advice, they could plug a major ‘support gap’ for those who are not currently willing or able to pay for advice.

The FCA’s December 2020 publication of Evaluation of the impact of the Retail Distribution Review and the Financial Advice Market Review identified that existing regulation around the definition of ‘advice’ is creating a barrier to firms providing more helpful guidance to consumers.  TISA is leading industry efforts to have advice regulations amended to allow pension and investment firms to provide more engaging and personalised support services to consumers, to complement advice.

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