Fairstone survey reveals concerning levels of financial engagement

A independent online survey of more than 2000 adults aged 16-75 in Great Britain carried out by Ipsos MORI, on behalf of Fairstone, one of the UK’s largest chartered financial planning companies, has thrown light on attitudes towards investing, retirement and financial planning among a nationally representative sample of GB adults in 2017 and allows some comparisons with a survey carried out in 2010.

In the 2017 survey[1]:

52 per cent of respondents did not or do not have a retirement plan in place
In the last 12 months, among those who have savings and investments, only 48 per cent had reviewed the cost or performance/value of any savings or investments either themselves or through a financial adviser
Just nine per cent of respondents used a financial adviser to review these holdings;
23 per cent personally reviewed the performance or value of their savings or investments;
Other than pensions and ISAs, just 41 per cent of respondents were aware of different forms of tax efficient* savings and investments.

In a surprising set of statistics, the 2017 survey revealed that a staggering 52 per cent of respondents have no retirement plan in place, in spite of significant publicity in this area. The latest survey also highlights that 24 per cent of respondents had a retirement plan that would provide/does provide all of the income required and 11 per cent of those with a retirement plan do not believe it will produce sufficient income in retirement.

In the 2010 online survey conducted among adults 18+ by ICM [2]:

37 per cent had no retirement plan in place;
53 per cent had reviewed their savings, investments and mortgages in the previous 12 months;
10 per cent of those surveyed used a financial adviser to review their personal finances.

In the 2010 survey, respondents were asked whether they had a retirement plan which would provide all of the income they would need when they stopped work. At that time 33 per cent believed they had an adequate retirement plan in place to meet their income needs, 21% had a retirement plan but it would not provide all the income required and 37 per cent did not have a retirement plan at all.

Angela Murfitt, chartered Financial planner at Fairstone, said: “We were very surprised to see the low number of adults who have a retirement plan in place. With a constantly changing pension regime in the UK, we can understand that complexity can be off-putting but we firmly believe that pensions are still a generous tax planning tool and can provide for a more comfortable retirement. With annuity rates generally at low levels compared with the past and reliable income incredibly hard to come by, we are less surprised by the sentiment felt by many that their retirement pot will not provide the income they need when they stop working.”

Lifetime ISA

In spite of considerable attention on the new Lifetime ISA only 13 per cent of respondents aged 18 to 40 who took part in the 2017 survey were very likely to take one out and 28 per cent were fairly likely to do so in the next 12 months. 42 per cent were either not very likely or not at all likely to take one out in the next 12 months perhaps reflecting the lack of clear guidelines over the sale of these products. Those aged 18 to 40 with higher education qualifications (Degree, Masters or higher) were more likely to take one out with 51 per cent responding that they were very or fairly likely to take one out in the next 12 months.

Less than half (48 per cent) of respondents who have any financial savings and investments had reviewed the performance or cost of their investments or savings in the past 12 months in the latest survey and of those 23 per cent chose to review these themselves. Just 9 per cent turned to their financial adviser to review their savings and investments. Startlingly, in the context of the uncertain political climate and volatile markets, 49 per cent of respondents had not reviewed their holdings in any way. In the 2010 survey, just 19 per cent of those surveyed had not reviewed their savings, investments or mortgages in the previous 12 months**.

Retirement Age

In the 2017 survey, across all respondents who are working full or part-time, when asked at what age they think they will retire, 18 per cent believed it would be between 66-70 years old and 14 per cent between 61-65 years old. Perhaps as a reflection of the number of people admitting to having a retirement plan in place, the largest percent which had a view on when they would retire was 19 per cent who planned to retire whenever they can claim their state pension. Over one quarter of respondents (26 per cent), did not know when they would retire.

Savings

The 2017 survey results reveal that respondents are most likely to have cash savings accounts – including ISAs (66 per cent), with 31 per cent having a private or company/workplace pension and 15 per cent having equities or shares (including Equity ISAs). Looking deeper into the figures, men were more likely than women to have a private or company / workplace pension (36 per cent vs. 26 per cent) and are more likely to have equities or shares – including Equity ISAs (19 per cent vs. 11 per cent). Almost a quarter of respondents, 23 per cent, had no savings or investments at all.

Lee Hartley, CEO of Fairstone, commented: “It is worrying to see the level of financial engagement amongst this portion of the population. In spite of the headlines and promotion of auto-enrolment it is shocking to see that more than half of the people we surveyed did not or do not have a retirement plan in place. In addition, in such a volatile political environment and with markets still so uncertain it is disappointing that respondents were reviewing their savings and investments so infrequently. We understand that pensions are a complex area of savings, but we would urge people to seek advice and not ignore such an important part of planning for retirement.”

Read The Financial Future: Consumer Attitudes Towards Financial Planning and Themes for 2018 white paper by Fairstone’s here 

[1] 2017 survey: On behalf of Fairstone Group, Ipsos MORI interviewed 2,200 adults aged 16-75 in Great Britain using i:omnibus, Ipsos MORI’s online omnibus. Interviewing took place between 17th-21st February 2017, with fieldwork quotas set on age, gender, region. The sample was further balanced according to social grade and working status, with the sample data weighted to known population profiles. Sub-samples included in the commentary include 943 adults aged 18-40, and 458 adults aged 18-40 with a degree, masters or higher, 1,411 who work full or part-time or are self-employed, 1,623 with financial savings or investments and 1,089 men and 1,111 women were interviewed.

[2] 2010 survey: ICM Worker’s Life Planning Survey, age 18+ adults in GB, 2003 nationally representative interviews.

* Premium Bond(s), Venture Capital Trust(s) (VCT), AIM IHT (Inheritance Tax) Portfolio(s), Enterprise Investment Scheme(s) (EIS), Maximum Investment Plan(s) (MIP)
** Savings, Equity Shares, Pensions, Mortgages, Trusts, Bonds, Gold or Other investments

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