Fairstone survey reveals surprise fall in consumers’ financial engagement

A wide-ranging independent online survey amongst adults aged 18-75 in Great Britain carried out by Ipsos MORI, on behalf of Fairstone, one of the UK’s largest chartered financial planning company, is published today and throws light on the changing attitudes towards investing, retirement and financial planning amongst a broad spectrum of GB adults, between 2010 and 2017.

  • 52% of respondents currently do not have a retirement plan in place, compared with only 37% without a plan in 2010
  • A smaller proportion had reviewed the cost or performance or their financial investments over 12 months in 2017 than in 2010
  • A smaller proportion have used a financial adviser to review their personal finances in the past year (10% in 2010; 6% in 2017); 23% who have savings and investments personally reviewed the performance or value of their savings or investments, according to the 2017 survey;
  • Just 41% of respondents were aware of tax efficient savings and investments, according to the 2017 survey.

In the 2010 survey, respondents were asked whether they had a retirement plan which would provide all of the income they would need when they stopped work. At that time 33% believed they had an adequate retirement plan in place to meet their income needs, 21% had a retirement plan but it would not provide all the income required and 37% did not have a retirement plan at all. In a surprising set of statistics, the 2017 survey revealed that a staggering 52% of respondents has no retirement plan in place, in spite of significant publicity in this area. The latest survey also highlights that 24% of respondents had a pension which would provide all of the income required, down 9% percentage points from the figure in the 2010 survey, and 11% of those with a retirement plan do not believe it will produce sufficient income in retirement.

Angela Murfitt, Chartered Financial planner at Fairstone, said: “We were very surprised to see the decline in consumers who have a retirement plan in place. With a constantly changing pension regime in the UK, we can understand that complexity can be off-putting but we firmly believe that pensions are still a generous tax planning tool and can provide for a more comfortable retirement. With annuity rates generally at low levels compared with the past and reliable income incredibly hard to come by, we are less surprised by the sentiment felt by many that their retirement pot will not provide the income they need when they stop working.”

Lifetime ISA

In spite of considerable attention on the new Lifetime ISA only 13% of respondents aged 18 to 40 were very likely to take one out and 28% were fairly likely to do so. 42% were either not very likely or not at all likely to take one out, perhaps reflecting the lack of clear guidelines over the sale of these products. Those with higher education qualifications (Degree, Masters or higher) were more likely to take one out with 51% responding that they were very or fairly likely to take one out.

A smaller proportion of respondents who have any financial investments had reviewed the performance or cost of their investments or savings in the past 12 months in the latest survey compared with 2010 and of those 23% chose to review these themselves rather than using the services of a financial adviser, 9%. Startlingly, in the context of the uncertain political climate and volatile markets, 49% of respondents had not reviewed their holdings in any way.

Retirement Age

Across all respondents who are working full or part-time, when asked at what age they planned to retire, 18% believed it would be between 66-70 years old and 14% between 61-65 years old. Perhaps as a reflection of fewer people admitting to having a retirement plan in place, the largest number which had a view, 19%, planned to retire whenever they received their state pension. 26%, over one quarter of respondents, did not know when they would retire.

Savings

The vast majority of savings nationwide, 66%, are held in cash savings accounts (including ISAs) with 31% in a private or company workplace pension and 15% held equities or shares (including Equity ISAS). Looking deeper into the figures, men were more likely than women to have a private or company pension (36% vs 26%) and are more likely to invest in shares (19% vs 11%). Almost a quarter of respondents, 23%, had no savings or investments at all.

Lee Hartley, CEO of Fairstone, Commented:

“It is worrying to see that the level of financial engagement amongst a representative portion of the population seems to have deteriorated. In spite of the headlines and promotion of auto-enrolment it is staggering to see that more than half of the people we surveyed did not have a retirement plan in place. In addition, in such a volatile political environment and with markets still so uncertain it is disappointing that respondents were reviewing their savings investments less than in our original survey. We understand that pensions are a complex area of savings, but we would urge people to seek advice and not ignore such an important part of planning for retirement.”

To find out more about the options available to you, contact Fairstone on 0845 605 0689 or email info@fairstone.co.uk for further information.

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