PIMFA
15 November 2023
Greater personalisation may encourage greater saving and investing in UK although there are limits to how much, PIMFA research finds
A greater focus on personalised communications may help to improve engagement in financial services, a report from PIMFA, the trade association for wealth management, investment services and the financial advice and planning industry, has concluded.
The new research report entitled: ‘A Little More Personalisation’ produced by PIMFA in partnership with market research firm Savanta, surveyed over 500 adults with more than £10,000 that could be invested. The research sought the views of those that described themselves as advised investors, DIY investors and non-investors.
It found more than a fifth (22%) of those who identified as non-investors would be encouraged to invest if they were able to access some form of basic personalisation compared with only 12% who said they would invest using generic guidance as is currently the case.
But fully tailored personalised advice was identified as the best way to encourage greater saving and investing, with 51% of those identifying as non-investors saying they would be most likely to start investing if this was something they were able to access.
The research further found that 68% of non-investors said they probably, or definitely, would not start investing within the next 12 months. The reasons given for not doing so ranged from perceptions of the investment world as intimidating (56%), a lack of exposure to investing within their social circles (77%) and feeling emotionally apprehensive or overwhelmed about investing (54%). Moreover, only 46% of non-investors understood the risk of the value of their cash savings being eroded by inflation over time.
Meanwhile, among those that described themselves as investors (whether advised or DIY investors), the reason cited by the majority for them beginning their investment journey was hearing about the investment experiences of others within their social network. Hearing about the investment experience of friends and family was cited by 45% of advised investors and 31% of DIY investors as the reason they began investing themselves.
The research further found that 77% of advised investors and 70% of DIY investors described their financial status as secure, compared with only 59% of non-investors.
This lack of financial security helped contribute to a lack of confidence among non-investors when it came to managing their investments, with 49% of non-investors saying they believed investing was only for those that already had a large amount of money and 53% of non-investors saying they would only consider investing if they were to come into a large sum of money or inheritance.
These hard-wired perceptions are contributing to a cycle of non-investment which will only build inadequacies over time rather than narrow them. A pre-existing lack of confidence in making decisions, coupled with an isolation of influence among non-investors, suggests that positive interventions are required to overcome this lack of confidence.
Both advised and non-advised (‘DIY’) investors, and non-investors, saw value in personalisation for longer-term financial planning, with fully personalised options perceived as most likely to encourage some to start investing. Unsurprisingly, those that had already received advice said they valued a fully tailored personal advice model (57%) compared with 42% of non-investors and 32% of DIY investors. Basic personalisation was the next preferred option of 40% of advised investors, 34% of non-investors and 56% of DIY investors.
The report concludes that non-investors require targeted advice to gain confidence to act in order to make initial investment decisions. Unfortunately, the introduction of basic personalisation elicits only a small change in intended behaviour relative to the provision of generic guidance. This suggests that whilst the introduction of added personalisation would likely be welcome, its impact to encourage greater saving and investment will be limited.
Simon Harrington, Head of Public Affairs at PIMFA and author of the report, commented: “PIMFA has always been strongly committed to fostering a culture of saving and investment within the UK. We sought to commission this report in order to test our own hypothesis that providing non-advised consumers with targeted, personalised guidance to encourage investment decisions would help more people overcome the behavioural barriers which prevent them from investing. In this area, our findings are somewhat disappointing.
“From our research, the introduction of basic personalisation for non-investors would have some, but not a substantial impact on consumer behaviour relative to the status quo where no personalisation exists. This means encouraging people to make active decisions about their finances requires a radical change in consumer behaviour.
“We are more positive about the impact increased personalisation could have with investors who are already somewhat engaged in making investment decisions as DIY investors as well as those who will be forced to engage when they come to decumulate as pension savers. It is clear to us that there is an argument to give greater thought to providing people with better targeted support when they need it most to help them achieve a better outcome. Clearly these are changes which cannot be made within the current regulatory and legislative framework.”
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NOTES TO EDITORS
About PIMFA – the Personal Investment Management & Financial Advice Association
- PIMFA is the trade association for firms that provide wealth management, investment services and the investment and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
- The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
- PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families to charities and pension funds, all the way to trusts and companies. Associate members provide professional services to the PIMFA community.
- PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
- PIMFA has made numerous recommendations to the FCA regarding the Future of Advice, the Future of Supervision and the FSCS levy – read more.
- PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
- Find out more about PIMFA’s Diversity and Inclusion work – read more
- Further information can be found at pimfa.co.uk
Contact
For further information on this release or other press matters please contact:
Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376 / +44 (0) 7843 903258
Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869
