The industry must address the fact that most consumers equate investment with gambling, which means there is an overwhelming reliance on cash, according to BlackRock’s managing director of UK retail.
Speaking at a Tax Incentivised Savings Association event this morning (11 February), Tony Stenning said an over reliance on cash - backed by his firm’s recent survey - is increasingly creating “real problems” for society.
“We need to develop industry-wide rules of thumb, which can be communicated simply to consumers,” he stated, adding that while digital presents an opportunity, things like robo-advice are not the panacea.
“Many people aged over 55 are worried about their retirement, but the data shows that few have sought guidance or advice since the freedoms were introduced. Confidence in financial services and their own financial capability is abysmally low.”
BlackRock’s research, which takes in over 4,000 UK consumers, found allocations to cash are 41 per cent, versus the 33 per cent they think they should ideally hold.
In terms of ‘millennials’, 62 per cent said “investing is like gambling” and despite their longer investment horizon, they hold high amounts of cash - 70 per cent of their portfolio is in cash or cash like investments.
Mr Stenning’s comments were backed by Henderson Global Investor’s head of customer strategy Steve Jenner, who reiterated Tisa’s research and requests for a kitemarked guidance framework to be introduced.
“Guidance currently stops short of product purchase, providers are too scared to be seen straying into recommendations, so we need a safe harbour of non-complex product options.
“We need to level the playing field between the guidance that the Money Advice Service can give and what product providers can say without straying into recommendations.”
The Tisa event was focused on the Financial Advice Market Review, but as Tisa’s head of policy strategy development Peter Smith admitted, neither the regulator or government were present as they are currently unable to comment on the consultation.
Mr Smith said he was told that the FAMR had received 280 responses and thanked industry participants for backing Tisa’s official response to the review.
peter.walker@ft.com
