03 June 2016

The country’s savers need you more than ever.  Not just for the independent planning and investment advice you provide them with but almost as much for the softer skills of confidence and optimism that you can instil in them.

According to our latest Investor Pulse survey, there are clear distinctions in attitudes towards investing between the advised and non-advised mass-affluent Britons we talked to.

Those with advisers felt more optimistic and in control of their financial future. Even better, people with independent advisers felt much more confident, compared to those with tied advisers from insurance companies.

Ask advised clients how they feel about investing and the most popular answer you get is ‘responsible’; ask non-advised people and the answer is most likely to be ‘cautious’.

The good news is that a brighter view of the financial future translates into a more rational view of how their savings should be invested.

Those with a financial adviser typically had 30% of their investable assets in cash while those who have never sought financial advice hold 52%.

Similarly, just over half of the advised segment said they were willing to take on higher risk to achieve higher returns, versus just 35% of the non-advised camp.

Confidence begets more confidence when it comes to investing. Respondents who were comfortable investing in stocks and shares were more likely to describe the way they feel about investing as ‘purposeful’. Meanwhile, 70% of the pro-cash camp said they felt negative about investing.

It begs the question: why are so many savers shunning equities and bonds (amongst other investments) in favour of cash? A closer look at our findings suggests that the benefits of investing for the longer term are understood – it just needs a little nudge along with some evidence to move people in the right direction. 

When we showed people how the FTSE All Share index had easily outperformed cash over the past decade – even with the dramatic post crisis dip of 2007-8 - close to half of respondents said they would want some equity exposure and a further 28% wanted equal cash and equity weightings; only 20% who saw the chart would have stuck solely with cash.

Our findings suggest there is a massive opportunity for the adviser community to engage with potential clients who are earning very little interest on their significant cash holdings.

This is particularly the case when it comes to what is for many the most important financial goal of all, retirement.

When asked if they expected to achieve a sufficient annual income in their later years, a little under half of the sample said they felt ‘somewhat confident’ that they would, versus only 18% who did not share this optimism.

This appears to be irrational rather that rational optimism. It suggests that savers have not reconciled that holding significant sums in cash for extended periods may ultimately prove a stumbling block to achieving the retirement they expect and want – a great talking point to consider next time you sit down with a prospect.

Instilling rational confidence into clients is particularly relevant right now as stock markets gyrate and news headlines paint a grim picture of global economic prospects.  The siren call of ‘safe’ cash with little or no return has never been louder.

But this also means that the opportunity to interact with the UK’s army of cash-hoarding savers has never been greater, particularly since the pensions freedoms came in last year.

Your country’s savers need you.

CARS ref: UKRSM-0137

It begs the questions: why are so many savers shunning equities and bonds (amongst other investments) in favour of cash?