Retail Investment Boost of 53% Possible through Landmark Targeted Support Regime, Research Shows
People who have never invested before invest up to 53% more after receiving Targeted Support compared with those left to their own devices, according to research published today by The Investing and Saving Alliance (TISA) and the University of Nottingham. The research findings add to a growing body of evidence that the Targeted Support regime has the potential to help build and develop a ‘retail investing culture’ in the UK.
With only 9 per cent of the UK population currently paying for financial advice, many consumers are not receiving the support they need to make better, more confident financial decisions. According to the research, aversion to risk, expectations of low returns and a preference for keeping money in the UK are significant barriers that are deterring consumers from investing.
However, the recently launched Targeted Support framework now allows authorised financial services organisations to proactively offer recommendations which provide reliable information and support people to make informed financial decisions. Groups with shared characteristics will be given more personalised support and recommendations that may help overcome investing barriers and put consumers in a better position.
If these recommendations are based on consumers’ attitudes – an approach known as attitudinal Targeted Support – research indicates the investing boost could be as large as 53% when compared with those who received no support.
Carried out in conjunction with Barclays, Lloyds Banking Group and Vanguard, the research found that attitudinal Targeted Support had a larger effect on groups typically seen as less likely to invest, with:
- A 53% increase in allocated investment by those who had never invested before
- A 47% increase in allocated investment by consumers who expressed a preference for keeping their money in the UK – currently one of the biggest barriers to investing, which attitudinal Targeted Support can overcome
- A 31% increase in allocated investment by women.
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 help 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 it 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.”
ENDS
Notes to Editors
- This research will be officially launched at TISA’s Financial Advice and Guidance Conference taking place on 15th April, 9:00–15:00. Please get in touch should you wish to attend.
- Interviews are available on request at the Conference.
- Full report available on request.
- Targeted Support policy framework offers the potential for banks and investment platforms to provide consumers with recommendations that help guide them towards appropriate investment products.
- The results are based on an online large-scale randomised controlled trial of 4719 UK adults. Participants were asked to allocate a hypothetical £10,000, currently held in savings, across a set of savings and investment options over a 5-year period. The options included cash savings, a UK fund (FTSE 100), a global balanced fund, a global growth fund and a global cautious fund. Participants had complete freedom over how to distribute their allocation.
- The result of barriers to investing was based on a survey of 1500 UK adults.
- TISA is a not-for-profit membership organisation committed to improving the financial wellbeing of all UK consumers by working collectively with the financial services industry to deliver solutions and champion innovation, for the benefit of people, our industry, and the nation.
- TISA has approximately 270 member firms involved in the supply and distribution of savings and investment products and associated services. Members include the UK’s major investment managers, retail banks, online platforms, insurance companies, pension providers, distributors, building societies, wealth managers, third party administrators, FinTechs, financial consultants, financial advisers, industry infrastructure providers and stockbrokers.