Birthstar has launched its fourth report in its CPD retirement series which it said addresses diverse consumer needs, meaning investments are more sophisticated.
The firm said that participation in long-term non-cash savings plans such as stocks and shares, new instant savings accounts and self-invested personal pensions is low, so the risk of “future financial unhappiness” for many individuals is real, due to the advice gap between regulatory guidance and intermediary firms.
It added that investment propositions can be tailored to known behavioural patterns to simplify savings decisions and deliver better savings outcomes.
Birthstar said that understanding the basics of a product is not a solution in itself and leaves the problem of selecting a subset of suitable products from a universe of investments unresolved.
Alongside this, simplifying investment choice helps make the transition from an investment objective to selecting an investment product short and certain.
The firm said in its fourth paper that to investors, the vast array of increasingly sophisticated products choices appear complex, confusing and removed from their fundamental savings objective: aspire and attain a better quality of life.
With consumers lacking in confidence, they are unable to make investment decisions that best meet their objectives and often end up deferring such decisions or mismanaging them.
Henry Cobbe, head of research at Birthstar, said: “Our proposed approach is to modify the nature and presentation of investment product offerings so that they mesh naturally with investors’ intent and capabilities for making investment decisions, while correcting common behavioural mistakes they make along the investment journey.
“Making the process of choosing from an overwhelming array of investment products easy and intuitive offers the promise of nudging consumers away from deferring or mismanaging investment decisions that eventually hurt their aspiration to lead a better quality life.”
Birthstar launched the first in the CPD research series - aimed at helping advisers navigate the new pension freedoms with their clients - in June this year.
The research and advisory firm for asset managers and intermediaries said the series should assist with the theory and practice underpinning retirement planning from both an investment and behavioural perspective.
ruth.gillbe@ft.com
