Older people being tempted into ‘risky’ investments
The research was conducted among those aged 55-75 and found that retirees are finding products that they would not usually consider more tempting, due to the UK’s prolonged low interest savings environment.
Despite finding these riskier assets more alluring, a small fraction of retirees thought about making use of a financial adviser to help them get the most from their money. Just 12% said they had taken advice from an independent adviser to see how they could make their money go further.
Is it safe?
The FSCS study found that more than one in three older people had invested money after retiring. While more than two-thirds said they knew all of their investments were protected by the FSCS, there was not such wide understanding of how much FSCS protection was available for their money.
The FSCS warned that the riskier attitudes to investing highlighted the importance of checking if new pensions or investment products are FSCS protected, which you can now do through a checker tool on the FSCS website.
Caroline Rainbird, CEO of the FSCS, said the scheme was seeing increasing numbers of people looking for compensation due to failed pension and investment products, or poor advice.
She added: “The real danger is that if consumers choose to put money into high-interest pension and investment products that are not FSCS protected, they could lose life-changing sums of money from their retirement pots if the product provider fails.”
It’s not just older people turning to riskier assets though. Last month the Financial Conduct Authority, the main financial regulator, warned that younger people were being tempted into backing risky investments like cryptocurrencies which may not be suitable for them.
The FSCS is a safety net scheme designed to support customers of financial businesses should they go bust. When it comes to investing, the FSCS protects the first £85,000 you have invested with a particular firm should it collapse, though it offers no protection against poor performance of any asset you invest in.