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Experienced Investor

Lack of transparency holds back £35bn of investment

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UK adults would invest an average of £693 more each year – equating to £35bn in total – in stocks and shares ISAs and funds if there was greater transparency.

A study carried out by investment platform Willis Owen found that adults in Wales were the least likely to invest because of what they described as a lack of clarity regarding investment products.

A total of 68% of Welsh survey respondents had been put off investing because they felt products and their investment risks had not been explained properly. Adults based in Wales said they would invest an additional £709 on average a year – equating to £1.97bn in total – if product details were made clearer .

Other regions that cited a lack of transparency as a major hurdle to investing included London and Scotland – where 66% of respondents had decided not to invest.

Here’s how the regions break down:

Source: Willis Owen

Industry at fault

Close to 59% of respondents believe the financial services industry does a bad job at explaining how products work, with 12% describing them as ‘very unclear’.

Only 24% of investors took the view that asset managers provide clear explanations of the risk profiles of funds.

Adrian Lowcock, head of personal investments at Willis Owen, said: “A ‘clarity deficit’ of £35bn in the UK is scandalous. People need to be saving for their futures, but if they are put off investing by the lack of clarity in the products then this means they are missing out on the benefits of the long-term returns generated by financial markets.”

He believes the time is ripe for the financial services industry to take action: “A step change is clearly needed in terms of helping people to understand more about investing. This is one of the main reasons why we launched our starter portfolios.”

Willis Owen’s starter portfolios are designed for savers who want to make their own investment decisions but would like some support getting started. They comprise of portfolios across different risk profiles, which either invest in active or passive funds.

Investors in these portfolios will gain educational support for at least 12 months.