Just one in 10 (11%) parents are currently investing on behalf of their children, according to new research from Alliance Witan.
While financial literacy is a priority for some parents, with 29% stating they teach their children about saving and investing, the firm said this is failing to translate into action.
Although more than double the number of those investing, Alliance Witan said only 25% of parents are building cash savings for their children.
Of those parents who are currently investing, more than half (56%) said that their primary motivation is to put their child in a better financial position than they were in, followed by 44% who expressed a desire to gift their child a lump sum once they become an adult.
Alliance Witan said helping their child onto the property ladder was also a top ambition for parents, with 42% of those currently investing citing this as a core motivation for getting started.
The rising cost of putting children through university is also a key concern, with a third (33%) of parents stating that they began investing to help cover the cost of university fees and maintenance.
Parents are also investing to help their children achieve personal ambitions, including to allow them to go travelling after finishing their studies (23%), and to cover the costs of their child’s sporting or musical ambitions (21%).
However, the research found that 26% of parents admit they currently take no specific actions to plan for their children’s future, with this rising to 44% among parents who do not invest and have no intentions of starting.
Among those parents who have already started investing for themselves, Alliance Witan said relatively few are also actively investing on behalf of their children. Of investors using platforms like Hargreaves Lansdown and Fidelity to buy shares or funds, just 33% say they are actively investing for their children. This drops to 30% for investors using pre-made investment products, and 27% for those investing via financial advisers or brokers.
Mark Atkinson, senior director, Willis Towers Watson which manages Alliance Witan, said: “All parents want the best for their children, but our research shows that very few have taken the proactive step of investing and taking advantage of tax-free junior ISAs.
“With the cost of university rising, and breaking into the housing market becoming an increasingly difficult objective for younger people, parents should be thinking about starting to invest for their children as early as possible.
“Even small monthly deposits over a longer time horizon can result in significant pot sizes thanks to the miracle of compounding, while taking a long-term investing view removes the worry of shorter-term market volatility.”
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