ONS sees increasing caution by investors as time passes
UK investors have become more risk averse over the past six years, research by the Office for National Statistics has found.
The third and final part of the ONS Wealth in Great Britain survey, which compared wealth and assets in the periods between July 2006 to June 2008, and July 2008 to June 2010, studied changes in the wealth of private households across Great Britain.
For the first wave of research, conducted between 2006 and 2008, 71,268 adults and children were interviewed across 30,595 private households, while 46,347 adults and children across 20,170 private households were questioned in the second phase.
The 37-page report found that 68.7 per cent of people from households in the lowest total wealth band - £50,000 or less - had changed their attitude to become more risk averse by 2008/10, while 51.6 per cent in the highest total wealth band - £750,000 or more - had also expressed more caution.
Some 69.2 per cent said they would prefer a guaranteed payment of £1000 in both periods, compared to 8.8 per cent who preferred the riskier strategy of a one in five chance of winning £10,000.
Of the individuals who were contributing to a private pension in the first phase, 8.8 per cent were no longer doing so by 2008/10. Conversely, 6.9 per cent of individuals who were not contributing to a private pension in 2006/08 were contributing by 2008/10.
However, 84.3 per cent of individuals did not change their private pension contribution behaviour between the two periods.
Elsewhere, more than one-fifth of individuals living in households that had moved into negative net financial wealth between the two periods were from households with a total wealth of £400,000 or more, while 39.4 per cent of individuals from households with positive net financial wealth were over state pension age.
Kevin Morgan, managing director of Hertfordshire-based Consilium Financial Planning, said: “My gut feeling overall is that people have become more cautious, but from my point of view I haven’t seen a big change in this time period. People understand investments can be cyclical and the risks can vary.
“If I were asked five or six years ago for my opinion of bank stocks I would have thought they were low risk, but that has obviously changed now. The problems are well documented and have created a lack of trust in institutions.
“Ignorant comments by politicians on pensions also haven’t helped where this is concerned. In its purest sense a pension is a great savings vehicle and has a place, and we need to get that message across.”