Article by Phil
Over 60% of young people take less than 24 hours to make investment advice decisions.
That’s according to research conducted by the Financial Conduct Authority (FCA) who spoke to younger people aged between 18 and 40. Other interesting facts and figures to come out of the survey included the fact that:
- 15% of younger people make their investment advice decisions in under an hour.
- Whereas only 11% think about for more than a week.
- Over 40% said that social media was their preferred way to get access to financial information including investment advice.
- 85% said that they were at least influenced by social media. Mainly to buy crypto.
- The majority said that they had invested more than they intended to because of the dreaded fear of missing out (FOMO). But also, because they wanted to keep up with trends.
- 40% said they regretted their decisions made in haste.
In a separate survey by consultancy firm MRM in their Young Money Report, they found that:
- 90% of 18- to 30-year-olds wanted more guidance when it came to managing their money.
- Only 36% thought that it was their responsibility to find out about finance themselves!
- 40% said their families helped them, but
- 45% go to social media for advice and guidance.
- Only 25% said that they got financial information from newspapers or television.
- 60% said that they followed fin-influencers online.
- Nearly 80% said they trusted these influencers and only 3% didn’t trust them. This is real problem which we’ve looked at before.
Perhaps partly in response to research like this, the FCA has announced that it is replacing long standing EU Rules on financial product disclosure requirements with a new simpler set of rules. This will come into force under the Consumer Composite Investments (CCI) regime. Going forward consumers should start to receive information and paperwork about financial products which is:
- Accurate, understandable and comparable.
- Information that is useful in the decision-making process.
- Information which allows easy comparison between products to identify the best product for a client’s needs.
According to the FCA over 12 million consumers will benefit from this new streamlined and focused product information. If you’ve seen the paperwork that currently accompanies financial advice, anything that reduces this burden would be welcome.
Upgrade your Savings account.
It might also spur people on to change and upgrade their savings accounts. According to the Bank of England over £300 billion is currently sat in accounts which pay no interest. That means savers could be missing out on £15 billion in annual interest. Why?
It seems that over 20% of customers have never switched their bank accounts, whilst 40% said they had no plans to switch. Despite earning no interest! Perhaps it’s a product of years of low interest rates which created little incentive to change.
However, the amount needed to secure investment advice is steadily rising. Faced with increasing costs of regulation, investment advice firms have increased their average client assets by 17% over the last 12 months. The average client investment is now up to £117,000.
Our average client investment is now over £300,000. But most of that is in pensions.
People worried about tax rises.
It might take more than new streamlined product information however, to boost customer confidence. According to A J Bell research, over 80% of customers are worried about the specter of future tax rises. That’s despite reassurances from the Chancellor. It seems that people don’t trust our new Government on tax.
AJ Bell have called for firm commitments on pension tax relief, tax free cash and pensions tax to build confidence from savers and investors. Using an adviser also adds confidence for investors.
Advisor confidence
According to Scottish Widows research via their Investor Confidence Barometer:
- 82% of customers believe that their financial adviser offers value for money. That’s up by 10% since last year.
- 96% of customers said that being able to contact their adviser was a priority, whilst
- 96% said that their investments performance was their top priority
- 82% of clients said that they valued the benefits of cash flow modelling.
- But 64% were worried about the value of their investments going down this year because of economic worries.
All good reasons to use a financial adviser for investment advice.
