We saw a spike in the proportion of UK adults investing through 2020-2021, as household savings soared in the pandemic and fed through to investments. Unfortunately, 2022 painted a different picture, according to our latest UK Consumer Insights report, published today.
There are more investors now than pre-pandemic. However, the pandemic-induced gains have reversed across many demographics. A far greater proportion of retirees (aged 76+) are investing now than in 2018. But we’ve seen a significant fall in the proportion of younger people investing.
High inflation has squeezed disposable income and depressed levels of both saving and investing. The 36-55 age group feels the pressure of the high inflation environment more than others and is the least confident about getting through the coming months with their finances intact. This demographic is the primary target market for retail investment firms, so client acquisition and new business from existing clients are likely to be challenging in the short-term.
However, every cloud has a silver lining. The recent crises – pandemic and cost-of-living – have strengthened the desire to improve personal financial resilience, potentially leading to increased focus on risk-based investing in the medium-term.
Retail investment providers are likely to be looking at a difficult start to 2023, but with an opportunity to engage with consumers who are more motivated to improve their long-term savings behaviours as the current crisis subsides.