My least original investment-oriented message


Lucian Camp

Brand & Marketing Consultant

Lucian Camp Consulting

I’m sorry, I really am – I’m afraid this comment isn’t going to deliver my most original-ever message. In fact, it may be my least original investment-oriented message. But then, originality isn’t everything. Things can still be important and worth saying even though they’ve been said before. Hopefully this comment is one of those things.

And on the upside, at least the message is simple. It’s this: never over-estimate the levels of knowledge, confidence, awareness and insight of even the more active private investor.

In evidencing this proposition with the latest findings from the Active Private Investor sample in Bright Blue’s Investment Funds Report, I have to play some cards rather close to my chest. This is a syndicated study, with the costs met by a bunch of fund-manager subscribers: they’d be rightly displeased if I gave away too much of the data they’ve paid for, and of course particularly displeased if I gave away their own individual data on measures such as their advertising or brand awareness.

I don’t think any such problem exists if I stick to a high-level Executive Summary, though, not least because on this occasion the Executive Summary I’m imagining takes the form of a visual image. Imagine, if you will, a private investor standing in the middle of something like a field, or maybe a cricket or football pitch. Imagine a large number, and a broad range, of investment-related individuals – journalists, product providers, platforms, advisers, pundits, regulators – standing round the edge of the field, or pitch, or whatever. They all want to attract the attention of the investor because they all have messages they want to deliver, and the way they’re going about this is to shine torches in the investor’s direction.

Unfortunately, though…

…well, when I first thought of this image I saw the investor standing in a thick fog, so that hardly any of the torch beams made it through to the middle of the pitch. But on reflection, that’s not right. The investor isn’t in a fog. Much better if we envisage the investor in dazzlingly bright sunlight, representing the sum total of every other input – family, work, news, football team, health, telly, holiday plans, need to cut grass, etc etc etc etc – that’s occupying his or her mind. And the problem for all those people standing round the edge of the field is that hardly any of them have torches bright enough to be seen.
Importantly, though, in this round of the Active Investor module (AIM), the investor has noticed one torch. In the recent past, he or she has noticed that something has happened in the world of pensions.

Leaving aside the retired respondents, for whom the moment has arguably passed, only a very small single-figure percentage claim to be completely unaware of any changes. Over a third, indeed, claim to be “fully aware” of the changes. And they’ve taken a view, at least in outline, about what the changes mean to them: only 8% think they’re bad news, and nearly half think they’re good.

Over the period – or, indeed, over much longer periods – no other torch-shiner has made anything like this kind of impact. Ask the private investor about pretty much anything else – the ISA limit, brand awareness, advertising awareness, the existence of platforms, usage of financial websites or apps apart from Martin Lewis (who, it must be said, is waving the industry’s second-brightest torch) and, well, whatever the subject may be, the findings show that it’s only dimly entering the private investor’s consciousness.

And these, remember, are active investors, drawn from the thinnish ranks of that slice of the UK population who are positively engaged with this stuff. (For the last 18 months or so, Bright Blue’s sample has also included a group they describe as “tomorrow’s investors”, who are a younger group indicating an interest in making their first investments in the near future. They too have seen the individual on the perimeter waving the pensions torch, but the other torches really are very nearly invisible to them.)

Both today’s and tomorrow’s investors seem to be quite realistic about their lack of awareness, knowledge and insight. In one of the most striking findings, both groups are asked to rate their own knowledge of collective investments on a scale of 1 to 7. Over the last year, the proportion of today’s investors rating themselves really poorly – with a score from 1 to 3 – has more than doubled, steadily increasing from 23% to 53%. And the proportion of tomorrow’s investors giving themselves the same score is higher still, at 75%.

Given those figures, you’d expect a parallel increase in the claimed level of discomfort with making investment decisions. And you’d be right – over the same period, the proportion of today’s investors claiming to feel uncomfortable has increased more than three-fold, from 11% to 34%.

Those numbers are a) high, but also b) rather mystifying. I have no definite explanation, but can only suggest that perhaps it’s the pensions factor again – perhaps respondents think this is so important that it demands new level of understanding of how the investment world works.

This may all sound c) fairly downbeat. I don’t see it that way. To me, the good news – the rapid and almost-universal growth in awareness and basic understanding of the pensions changes – far outweighs the bad. Yes, it’s true that even for most quite engaged and involved individuals, moderately powerful torch beams are invisible from the centre of the field. But bring up a bloody great big searchlight, and in just about one year (remember, the Chancellor only introduced the Pensions Freedom changes in March 2014) you’ve achieved not far short of 100% awareness and understanding.

That’s the measure of what can be achieved, and I think that’s highly encouraging. Whichever kind of torch-waver you are – provider, platform, adviser, commentator, journalist, even regulator – it’s obvious what to do if you really want to get through to the private investor. As Robert Shaw nearly said in his immortal deadpan in Jaws, “You’re gonna need a bigger lamp.”

Lucian Camp
Consultant to Bright Blue Research

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