The FSA says the majority of people have no risk appetite at all when it comes to investments.
The FSA consumer awareness survey 2011 found 61 per cent of the 2,063 respondents are not willing to take any risk with their investment. Only 4 per cent say they are prepared to take more risk in the hope of securing higher returns.
According to the regulator, consumers have become “slightly” more risk-averse since similar research was carried out in 2010.
The number of people not willing to take risks with investments rose from 58 per cent to 61 per cent over last year while those prepared to accept more in pursuit of returns dropped from 6 per cent to 4 per cent.
The FSA says: “This is not surprising, given the uncertainty surrounding financial markets.”
The survey also shows people who own shares directly are the most likely to take risks to gain higher returns, with 8 per cent in this category. Seven per cent of those with unit trusts, equity Isas or personal equity plans have a higher risk appetite.
Fowler Drew investment director Stuart Fowler says: “If consumers are asked questions they do not understand, you cannot assign any importance to the answer. This conversation about risk is a dialogue between two deaf people.”
Bloomsbury Financial Planning partner Jason Butler says: “Given a choice, none of us can cope with loss. The role of a good adviser is quantifying the return an investor needs.”