Baby boomers need financial advice as many admit lack of investment knowledge and confidence

Research by savings and investments company, Aegon, reveals that despite baby boomers owning more than a third of the UK’s wealth*, many in this age group are missing out on potential investment gains as they lack confidence and knowledge about where to invest their money.

Wealth in the older age bracket is primarily driven by the value of property, pensions and savings. However, those aged 55+ admit they are highly risk-averse when it comes to investments, with 44% preferring to avoid risk at all costs, compared to 36% of those aged 18-34. A further 32% of those in the baby boomer age-bracket stated that being financially cautious is incredibly important to them, and another 18% said family and friends would describe them as cautious.

In addition, when asked to place their risk appetite on a scale from zero to adventurous, two in five (39%) of over 55s admitted that they have zero risk appetite, with just 17% of those aged 18-34 saying the same. A further 28% of baby boomers described their risk appetite as low.

Looking at the reasons for this, over a quarter (26%) of baby boomers said that concerns about making a wrong investment decision impacts their attitude to taking risks. Despite this, just one in four (25%) in this age group have sought advice from a financial adviser.

Active’s Claire Davison comments “The recent research by Aegon suggests that baby boomers are more averse to risk and I have seen a similar trend with my clients here at Active”

“As a financial adviser, I help my clients to understand that risk means identifying their own attitude towards it and the different types of risk”

Research also reveals that baby boomers lack confidence that their chosen investment strategies will deliver strong returns over the next five to ten years, with just 3% highly confident that this will be the case. In the younger age bracket, one in ten 18-34 year olds said that they are confident that they will see strong returns over the next decade.

Financial Adviser, Claire adds “I guide my clients to recognise that a proper financial plan considers their individual personal circumstances, objectives and risk tolerance. It acts as a guide in helping them choose the right types of investments to fit their long term needs and goals”

Those in the baby boomer age bracket are unsure about what a good return on investment looks like over the long-term, with one in five (20%) saying they don’t know what they view as a good return on investment over a ten and 20 year period.

Nick Dixon, Investment Director at Aegon comments: “Our research shows that, even though baby boomers have accumulated the most wealth, they are at risk of excessive caution and exposing their hard earned money to stagnation. Not only will growth potential be reduced, but the impact of inflation on savings held in cash or very low risk investments means that what those savings can buy will fall over time. Those in this age bracket should consider how to make their money work harder into retirement and avoid the trap of holding excessive amounts in cash, which can create a false perception of risk control. The reality is that many baby boomers, in retirement or nearing that point, are ‘sleepwalking’ into poor financial decisions as a result of failing to seek financial advice.

Taking measured risk is essential to generate decent investment returns. Good financial advice can build confidence and improve understanding of risk to inform investment decisions that best suit an individual’s life stage and goals.”

Claire Davison adds “This research highlights the advantages of using a financial adviser; establishing a long term relationship with someone that you trust will improve your knowledge and give you the confidence to help you to achieve your goals”

The information provided must not be considered as financial advice.  We always recommend that you seek independent financial advice before making any financial decisions.

*ONS household wealth from 2006 to 2016 analysis

Research carried out by Opinium in October 2018 among over 2,000 UK adults, weighted to be nationally representative.

Visit the Active website & click here find out more about Claire Davison, IFA

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