Brits’ savings stagnating as few seek advice

Failure to seek advice and lack of understanding around the importance of investing mean many people are risking their savings being eroded by inflation.

This is one of the key findings of our Relationship with Money report, based on a Censuswide survey of 2,000 adults earning over £50,000 a year. The report found that despite a plethora of news headlines about rising inflation, 46% of respondents do not invest – a figure that rises to 57% among women versus 34% of men.

Misunderstanding prevails

The survey uncovered a high degree of misunderstanding around investing and the value it offers. More than a third (34%) said they don’t invest because it is “too risky”, despite history showing that investing offers better returns than cash over the long term. The same proportion were worried about lack of understanding, showing the need for greater education around investing generally.

Another 32% said they had “no spare money” to invest, despite being in the ‘top 9%’ of the UK adult population and earning more than £50,000 a year . Staggeringly, even among those earning £100,000 to £149,999, 23% claimed they had no spare money to invest, highlighting a major gap in financial planning.

Perhaps unsurprisingly, the survey also revealed poor knowledge of investment concepts like investment risk, diversification and compounding, particularly among female respondents. For example, 39% of women said their knowledge of compounding was “very low” and only 5% said it was “very high”; among men, the corresponding figures were 14% and 20%. 

Support needed

It is clear that many people need support in understanding the power of investing and how it can help them grow their money over the long term. This is especially the case in the current environment of sky-high inflation. Indeed, among those who do invest, 78% said they invest to grow their money over the long term, and 39% to keep up with inflation/retain the real value of their money. 

The report suggests financial advisers have a key role to play in encouraging people to make the most of their money and achieve their goals. The survey found that among the 27% of respondents who use an adviser, their knowledge and confidence around investing was significantly higher. For example, when asked in which areas they had achieved a better outcome by using an adviser than doing it alone, the most common answer was “growing my money”, closely followed by “having a solid plan to achieve my goals”. These were also the parts of their adviser’s service that clients valued the most. 

Role of outsourcing

With large numbers of relatively high-earning people failing to seek financial advice and risking their money being eroded by inflation, there is a significant opportunity for advisers to expand their client base and help more people grow their money over the long term. Yet with advisers increasingly providing holistic financial advice, many simply do not have the time to build and manage investment portfolios as well. 

One option is to outsource the investment management side of things to a discretionary fund manager (DFM), such as Brewin Dolphin. Outsourcing takes away the headache of constantly monitoring clients’ portfolios, and provides peace of mind that a team of experts is keeping a watchful eye on market movements and, where appropriate, making portfolio adjustments quickly and decisively. Outsourcing can be particularly valuable during uncertain times – whether that’s a period of stock market volatility or a major life event such as divorce or bereavement – when clients may need extra reassurance or help navigating their changing circumstances. 

At Brewin Dolphin, we have been supporting advisers for more than 25 years. By partnering with us, you can rest assured that your clients’ investments are in good hands. We’ll take on responsibility for tracking performance, ensuring regulatory compliance and responding quickly to market events, so you can focus on what really matters: your clients.

To find out more about how we can work together, visit www.brewin.co.uk/intermediaries  

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The value of investments, and any income from them, can fall and you may get back less than you invested. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Opinions expressed in this publication are not necessarily the views held throughout Brewin Dolphin Ltd. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.