New research by TISA and the University of Nottingham reveals that Targeted Support is most effective when tailored to consumers’ attitudes, increasing investment by at least 30% more than that achieved by demographic-based Targeted Support. The research was conducted in conjunction with Barclays, Lloyds Banking Group, and Vanguard.
The research found that aversion to risk, expectations of low returns and a preference for keeping money in the UK are deterring consumers from investing. However, whilst all forms of Targeted Support increased investing behaviour, when recommendations were designed around these attitudes, it was materially more successful in encouraging retail investing.
The research also found that:
- Attitude-based Targeted Support has a larger effect on groups less likely to invest, including women and new investors. Attitude-based Targeted Support led to a 31% increase in allocated investment for women compared with 16% for men, and 53% for those who had never previously invested compared with 14% for existing investors.
- Individuals with a UK home bias, who received a UK-preference-tailored recommendation, invested 47% more than individuals with the same preference in the control group. Accommodating consumer preference through recommending UK-centric diversified investing could be a first step, helping savers become investors.
- The majority followed the Targeted Support recommendation they received, and attitude-based recommendations were more likely to be followed than demographic-based recommendations, suggesting consumers find recommendations more compelling when they reflect their own stated attitudes and preferences, rather than being based solely on demographic characteristics.
- Consumers also report high levels of comfort with answering attitudinal questions, suggesting that they are willing to answer questions about their financial attitudes and preferences.
With the new Targeted Support framework having launched on 6th April, this research will support firms to design and develop Targeted Support models and journeys to help overcome barriers to retail investing and support the Government’s wider goals of building an investing culture.
Sophie Legrand-Green, Head of Policy:Consumer Protection & Access at TISA, commented:
“The roll-out of Targeted Support is a defining moment which will bring meaningful financial advice and support to millions more people. As firms begin to deliver it, understanding what makes Targeted Support truly effective is an important next step to improving the nation’s financial wellbeing.
This research demonstrates that focusing on attitudes towards investing, rather than broad demographic assumptions, can give people the extra confidence boost to help them become investors. Evidence is clear that in the medium and long-term, investing often produces better financial outcomes than keeping money in cash. But people need the support and confidence to begin their investing journey, and attitudinal Targeted Support is one of the most effective ways to do this.”
Clare Francis, Savings and Investments Director, Barclays Private Bank and Wealth Management, said:
“We strongly support the introduction of targeted support as an important step in helping more people engage confidently with investing. Our own research shows there is over £610 billion in excess savings that could be potentially invested, highlighting both the scale of the opportunity and the urgency of closing the advice gap. TISA’s research demonstrates that once rolled out by firms, targeted support could act as a catalyst for meaningful behavioural change, strengthening the UK’s investment culture and better support consumers at all stages of their investment journeys.”
Sally Speake, Investments, Lloyds Banking Group, said:
“This research highlights how Targeted Support can empower people who want help moving from saving to investing, but haven’t known where to start. Rather than full, one‑to‑one financial advice, Targeted Support draws on shared behaviours and confidence levels to provide relevant support, helping people make decisions and move beyond doing nothing.”
Liz Waldron, Head of Product and Client Experience, Vanguard, UK said:
“There are nearly six million UK adults with the resources to invest whose savings are either entirely or mostly in cash. A lot of people who could benefit don’t invest simply because they don’t know where to start or don’t feel like investing is really for them. That’s especially true for women, where around four in ten with investments don’t even see themselves as investors.
If we meet people where they are, through targeted support journeys that acknowledge how they actually feel about money, we have a real opportunity to help more people achieve their financial goals. That might mean a more secure retirement, saving a house deposit sooner, or being able to put money aside for their children.”
John Gathergood, Professor of Financial Economics, University of Nottingham, said:
“Targeted Support is the most important change in retail investing since the introduction of low-cost, widely accessible online investing. This research provides the first large-scale experimental evidence that tailoring investment recommendations to consumers’ own attitudes can substantially raise the amount they will invest.”
