View more on these topics

Confidence trick

In the latter half of September, markets were yo-yoing and the FTSE 100 saw a 6 per cent fall of 300-plus points. This was also a fraught time for the eurozone as Greece, Italy and Spain were flailing and EU and UK leaders made warning noises about the unsustainability of the euro.

It was against this backdrop that the IMA conducted its latest Investor Perspectives Survey looking at investor confidence and asking how confident investors feel about markets and whether or not they plan to invest any more money over the next 12 months. Preliminary results show that although confidence might be down, this has not been accompanied by a desire to stay out of the markets. It seems that the appetite to invest is higher than confidence levels suggest and relatively few investors are thinking about withdrawing money.

This is an encouraging sign of sophistication among existing investors who recognise the long-term nature of investing in funds and the need to hold on to them where possible to allow them to recover from the inevitable drops in value caused by recent and ongoing market volatility.

But what of the novice investor or those yet to enter the market for the first time? They will not have experienced the good times and the benefits that accrue from stable or rising markets.

In the current economic climate, it would be hard to persuade this group to put their money and faith in the markets. Yet this is what many of them will be automatically signed up for next year with the beginning of the Government’s ambitious programme to auto-enrol millions of non-savers into a pension.

The IMA is a firm supporter of the concept of auto-enrolment as a way of tackling the huge pension gap faced by millions. The timing is unfortunate and highlights the communication challenges we face, one of which is overcoming the general malaise surrounding all things financial.

In the same way that people lack confidence in the markets, there is a lack of confidence about what pensions can deliver. This leads to those in the target market for auto-enrolment being highly sceptical about the point of saving into a pension despite the low level of contribution they are required to make.

Together with the UK’s economic situation and uncertainties persisting in other European markets, this view will only get stronger. One of the ways round it might be to find a way of playing up the matching of employer and Government contributions that make it a no-brainer for most people to remain auto-enrolled.

It is too early to tell what will happen but one thing is certain the economic outlook will remain bleak. The question is, can we persuade the sceptics to see past that and believe in what the good times can deliver?

Mona Patel is head of communications at the Investment Management Association



Steve Bee: Could a mass boycott put the brakes on auto-enrolment?

As you will know if you read my last column, millions of people will be auto-enrolled into pension saving from next year. This is necessary because of the fundamental changes to the state pension system and the ending of our 50-year experiment in the UK with the state providing an earnings-related second workplace pension for […]


FSA finds weaknesses in design of structured products

The FSA has published guidance for structured product providers after finding weaknesses in the way firms are designing and approving these products. Between November 2010 and May 2011, the regulator carried out a review of seven major providers of structured products, responsible for approximately half of the structured products in the UK retail market by […]

Driving force

Poor service and lack of client contact are often the reasons why businesses lose clients but creating a consistent review service will build value and ensure your clients’ financial engine is running smoothly


RBS announces £2bn pre-tax profits for Q3

Royal Bank of Scotland has reported pre-tax profits of £2bn in the three months to September 30. The result compares to a £1.6bn loss in the third quarter of 2010 and include a £142m writedown due to its exposure to Greek sovereign bonds. The bank has also reported an operating profit of £267 in Q3, […]

India: too big to ignore?

By Kunal Desai, head of Indian Equities, Neptune  India is officially the world’s fastest-growing major economy and remains firmly on track to become the third-largest economy by 2030, overtaking Japan and Germany. As an accelerating labour force combines with increasing labour productivity, is India getting too big to ignore? Click here for full article   […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm