Zero appetite for risk high amongst wealth holding baby boomers
7 March 2019
Despite owning over a third of the UK’s wealth, baby boomers are “excessively cautious” about investment risk, with a large proportion having a zero risk appetite, new research by Aegon has revealed.
It also found that just one in four of the over 55s had sought advice from a financial adviser.
The savings and investment company said that of those aged between 55 and 73, as many as two in five (39%) described themselves as having zero risk appetite. Their aversion to risk was more pronounced than the millennial generation, with 44% of baby boomers preferring to avoid risk at all costs, compared to 36% of those aged 18-34.
The research found that for 32% of those in the baby boomer bracket, being financially cautious is incredibly important to them and another 18% said their family and friends would describe them as cautious.
When asked the reasons behind their lack of risk appetite, over a quarter (26%) attributed it to fear of making a wrong investment decision.
Just 3% of over 55s felt ‘highly confident’ their chosen investments will deliver strong returns over the next five to ten years. Among the younger generation, this figure rose to one in 10.
Baby boomers also expressed confusion over what constitutes success, with as many as 20% saying they don’t know what they view as a good return on an investment over a 10 to 20-year period.
Commenting on the findings, Aegon investment director Nick Dixon said baby boomers were at risk of “excessive caution” and exposing their hard-earned money to stagnation.
Dixon said: “Not only will growth potential be reduced, but the impact of inflation on savings held in cash or very low risk investments means that what those savings can buy will fall over time. Those in this age bracket should consider how to make their money work harder into retirement and avoid the trap of holding excessive amounts in cash, which can create a false perception of risk control.”
He added: “The reality is that many baby boomers, in retirement or nearing that point, are sleepwalking into poor financial decisions as a result of failing to seek financial advice.”
ATEB Consulting’s Steve Bailey looks at how the FCA’s view of suitability and what that means in practice for...
The Supreme Court has ruled that a pension transfer made in ill health should not be subject to inheritance...
Lee Old, director, Antony George Recruitment, provides some tips for tackling your annual review meeting. The answer to this question...