UK adults would invest £35bn more a year if investment products were more transparent1

• Welsh adults are most deterred from investing by lack of clarity from investment management industry¹

New research⁽¹⁾ from Willis Owen reveals that UK adults would invest an average of £693 more a year – or £35 billion in total – into stocks and shares ISAs and investment funds if there was more clarity around the products.

The research also found that adults in Wales are the least likely to invest because of this lack of clarity, with 68% put off because products and their investment risks are poorly explained. Percentages in other regions include: London (66%); Scotland (66%); East Midlands (65%); North East (65%); Yorkshire/Humber (62%); North West (57%); South East (57%); South West (54%); West Midlands (55%); and East Anglia (51%). The national average is 61%.

The research reveals Welsh adults would invest an additional £709 on average a year, or £1.97bn in total, if product details were clearer (See Table One below).

Adrian Lowcock, Head of Personal Investments at Willis Owen, said: “A ‘clarity deficit’ of £35 billion 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.

“By rights it should be a win-win situation – if the investment management industry was more transparent it would see an extra £35 billion a year of extra investments to manage.

“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.”

Table One: Regional breakdown of average amounts adults would increase their investments if products were more transparent

Only 24% of UK adults investors think fund managers are clear in explaining the risk profile of their funds.  Some 59% describe the industry as being poor at this, with 12% claiming they are ‘very unclear’.

To help tackle this issue, Willis Owen has launched a range of starter portfolios that combine the investment expertise of its own research team, and the extensive tools provided by Morningstar Direct^SM. These portfolios are designed to help new, or indeed existing investors, get off to a good start when building a diversified portfolio and avoid some of the common mistakes. They comprise of three active, three passive and one income product. The active and passive portfolios are split into cautious, moderate and adventurous risk buckets. Novice investors using the starter platforms will gain access to Willis Owen’s platform as well as educational support for a minimum of 12 months.

Willis Owen starter portfolios

These portfolios are designed to help people who want to make their own investment decisions but require support with getting started. They are comprised of three active, three passive and one income product. The active and passive portfolios are split into cautious, moderate and adventurous risk buckets. Novice investors using the starter platforms will gain access to Willis Owen’s platform as well as educational support for a minimum of 12 months.

They have been selected by the Willis Owen research team – Liz Rees head of research and Adrian Lowcock Head of Personal investing – using the Morningstar team of over 100 analysts to narrow down the range of funds available.

The funds have been selected primarily on long term performance potential and with an eye on costs, especially in the passive range where costs are an automatic drag on performance. We have also considered the overall risk of the combined funds to ensure they are complementary and suitable for the target market/investors.

Meanwhile, in adding Morningstar to its service to provide enhanced analytics, Willis Owen clients will have greater functionality and more detailed information on funds and equities. The new tool provides greater transparency on the underlying holdings of funds, enabling Willis Owen investors to determine the extent of any overlaps.

Investors can also use it to assess the styles of funds, to determine whether they aim for ‘growth’ or ‘value’, their sensitivity to interest rate movements and sector and geographical exposures. Those who want environmentally-friendly portfolios can check the carbon ratings of the funds they hold. Investors can also drill down to individual stocks, assessing whether their prices offer fair value based on their long-term intrinsic values.

https://www.willisowen.co.uk