The closing months of 1998 saw the realisation amongst the average investor that low interest rates may be here to stay – leading to heightened uncertainly about where and how to save their money.
Despite this uncertainly, there is no evidence of increased use of advisers.
Rather, the proportion of the adult population who are not currently saving for retirement has increased over the course of the year, from 26 per cent in the first quarter, to 29 per cent in the fourth quarter.
While those already saving do so primarily motivated by fear of a future without money, those not saving tend to have too many conflicting demands on their money, or simply feel that retirement is too far away for them to worry.
However, socio-demographers highlight the changing nature of society, with young people delaying their "nesting" years until well into their thirties, putting added pressure of cash-hungry teenagers on the parents’ fifties, when they would previously have been saving for retirement. Retirement will inevitably be delayed – supported by improved health in old age, and the removal of an enforceable "retirement age".
Chart show relative appeal of various investment and savings products
The desire for secure savings above all else is under pressure from lower interest rates, leading to declining appeal of almost all types of savings products. In particular, the appeal of savings accounts, term deposits and even residential rental property has declined in the fourth quarter, with managed investments holding their position ranked third in terms of overall appeal.
The rising levels of uncertainty lead people to seek more information and advice, but apparently not specifically from financial planners or investment advisers.
Those who use advice tend to be upper income, white collar professional males, in the 40 plus age group, while the very small group who feel that they are likely to use advisers in future, are similar, but younger.
The resistance to taking (and paying for) advice, coupled with increasing confusion, is linked to a growing proportion of people (now 57 per cent) in favour of some form of compulsory savings scheme – an approach which would reduce the pressure for the individual to make decisions about their investment options.
The market for advice is wide-open – and the onus is on the advisers out there to deliver not only the "best" investment advice, but to do so in a way that recognises people’s risk tolerance levels, and particularly, the need to build a relationship built on trust rather than knowledge alone.
Debra Hall is Research Director of Research Solutions, the company behind the SaverPulse survey.
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