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Confusing and inflexible financial products, not consumer apathy, are the principal reasons behind an estimated £300bn savings gap in the UK, research suggests.
Most consumers say they would be more likely to save if products were more flexible and easier to understand, according to the survey of more than 2,000 UK adults by the Institute of Financial Planning (IFP) and NS&I.
Some 87% of respondents cited this as either the only or a contributory reason behind their lack of savings, despite almost 60% admitting they are worried about their finances.
Earlier this year, a report by insurance giant Aviva, said Britons would need to find more than £300bn if they are to retire on the recommended 70% of their salaries.
Fewer people have financial goals today compared with two years ago, the IFP study suggests. The same report in 2008 found 26% of respondents were working towards a financial objective, but that figure has now slumped to 14%.
"This survey has indicated yet again that consumers are worried about their financial position, yet they are not taking appropriate financial planning steps to improve it," IFP chief executive Nick Cann says.
"They are confused by the range of products available and lack confidence in them too. Clearly the need for sound financial planning has never been greater."
The report forms part of Financial Planning Week, a national consumer awareness campaign run by the IFP to encourage people to plan their finances. It begins today.
It suggests more people are seeking professional advice compared to last year. In 2009, only 7% of respondents regularly spoke to a financial adviser, while that figure has now gone up to 11%.
However, a significant chunk of the public said they remain unlikely to seek financial advice from a professional planner.
While 31% of respondents agreed a financial adviser would 'research the entire market and recommend the most appropriate product', 26% could think of no benefit at all to using one.
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Complete rubbish!
I have never come across anyone who did not save because financial products are too complicated. People save into a savings account first and then think of other options afterwards. The reason why people do not save is because they cannot afford to because the cost of living is high. Obviously getting advice would be a good idea if you wanted something more complicated than cash.
Posted by: Suhan Srinivasan
Can't Get Much Simpler
You can't get much simpler than a cash ISA or even an equity ISA tracking the FTSE 100 Index. The problem is with the savings gap it is easier to blame the product and the market etc than actually to make a commitment to saving. Have now pay later society that we live in.
Posted by: Bob Donaldson
Easy....
Well Bob is right we have this Buy it Now pay it back later culture and it this that has to change. Mark is right the savings gap is going to get wider if RDR is brought in as is. Suhan is right there are millions who just do not have any money left at he end of the week to save. Trouble is the Government has spoken about this but has done nothing to incentivise saving and investment.
Posted by: Mr Fisher
Poor products
Mark, you are correct read my comments below to Mr Sants, I suggest to all those who believe that they products offered in the UK ok take a look at the international market place. Why has it taken since 1986 for Sants to see the need for products offered to meet a minimum standard and why has all his predecessors miss this point or consumers need? When are we going to see a stop to the abuse of the words “Consumer Protection” by both the Treasury and regulators past, present and future? Clearly “FSA.GOV.UK and Treasury are one of a kind or the same ultimately the chancellor is at the top of the tree and it’s been a case of fooling some the people all the time. I entered this industry 1978 it did not take me six months to see that not all providers were delivering the same standard of products and costing structure, those at the top could be named on one hand. I agree with Mr Sants, my concerns still remain, the abuse of the words “consumer protection” which has been the case since 1986 in the interest of providers as the expense of us.
Posted by: Charles Bunbury
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RDR misses this point too
RDR focuses on commission and adviser qualifications as being stumbling blocks to closing the savings gap. In fact, with fewer advisers, and low earners unwilling to pay fees, RDR will directly lead to an increase in the savings gap for many consumers. Yet these real-world consumer views lay much of the blame at constant government tinkering. Plenty of us "experts" struggle with the non-stop changes, so how are clients supposed to understand.
Posted by: Mark Osland