A ‘confidence gap’ is affecting UK savers’ ability to invest or save, according to new research from TISA and EY Seren.
The cross-industry financial services body said nearly half (46%) of UK consumers have low confidence in making investment decisions, with women significantly more likely to feel overwhelmed by the financial options available.
Over three fifths (62%) of women said they feel overwhelmed by the range of options compared to 47% of men. Meanwhile, nearly a quarter (24%) of women said they would “struggle to know where to start” versus 16% of men.
Those consumers with a lack of confidence said the key drivers behind their apprehension were a risk of losing money, finding it too complex and confusing and not knowing enough about the options.
Age also plays a key role, with 63% of consumers younger than 50 more likely to feel nervous about the different financial options compared to 44% of over-50s. Younger generations were also more likely to say they haven’t had the opportunity to effectively organize their finances yet.
The research showed that millennials are also much more likely to feel embarrassed by their lack of knowledge compared to the overall average.
TISA and EY warned that if the industry and the regulator overlook these differences, women and those under 50 risk being left behind, choosing to prioritise shorter-term financial goals rather than long-term savings and investment.
Prakash Chandramohan, strategy director at TISA, said: “A key reason for commissioning this research was to explore the issues being faced by unadvised consumers when accessing support to make savings and investment decisions. The findings were stark, concerning but also not surprising with significant propositions of consumers feeling worried, overwhelmed, defeated before they start and not even knowing where to start.
“The provision of consumer is clearly not working for the vast majority of people, particularly those who do not seek financial advice. Furthermore, different cohorts, taking into account age and gender are worse off than others.”
Chandramohan called upon the industry and regulator to address these concerns, making sure consumers get personalised support and a clear path though the options available.
He noted: “To put it simply, the current system of consumer support in financial services needs to evolve but to achieve this, regulations need to be amended to allow firms more flexibility to provide personalised support to consumers. The UK’s Advice regulations are working for the advised but they are not working for the unadvised which is causing significant inequities which need to be urgently addressed.”
Stuart Welch, global head of personal investing and advisory at Fidelity International, added: “TISA’s research highlights just how many people are currently missing opportunities to secure their future financial security, with the greatest barriers facing women and younger generations. Furthermore, the confidence gap many face when it comes to long-term financial planning is instead being filled by seemingly easier spending opportunities.
“Through our own work, we know that when women see themselves as investors they are more confident and in control of their financial situation overall. We believe that personalised guidance could play an important part in engaging them and other groups as prospective investors – providing the same ease of experience for saving and investing that many have come to expect through spending.”
[Main image: victoriano-izquierdo-unsplash]
