The UK investment gap: £430 billion in cash savings not invested by UK adults

• New data and analysis from Barclays estimates 13 million UK adults hold £430 billion of “possible investments” in cash savings
  
• The findings reveal the scale of the “UK investment gap”, meaning savers are missing out on an opportunity to earn better returns over the long term
• A quarter of Brits admit to not knowing how or where to get started in investing
• With current regulation limiting how banks can support potential investors, Barclays sets out five public policy recommendations to help empower more UK savers to invest

New data and analysis from Barclays reveals 13 million UK adults are holding £430 billion of “possible investments” in cash deposits¹. These figures are a conservative estimate – based on savers who already hold more than six months’ income in cash savings – and reveal the scale of the opportunity if the UK can empower more people to invest.

Barclays believes that changes to regulation and improved consumer support are key to addressing the investment gap and enabling more UK savers to invest. Ahead of the Government and Financial Conduct Authority’s (FCA) Advice Guidance Boundary Review being finalised, the Bank has released a new report, “Empowering retail savers to engage with investing”, setting out five public policy changes needed to get more UK savers investing for their future.

What stops UK adults from investing?

Barclays research shows the major barriers preventing savers from investing and the misconceptions about the realities of what is involved²:

1. Choice paralysis: One in five (21 per cent) who do not currently invest think they have insufficient knowledge to choose what to invest in, while a quarter (24 per cent) think investing is too complicated.
   
2. Inability to compare products:  Nearly three quarters (74 per cent) would like to know what type of investment is best for them, while two-thirds of UK adults (63 per cent) want help comparing investment products.
   
3. Fear of risk: Of those who do not currently invest, more than four in 10 (43 per cent) think it is too risky and are worried they would “lose all their money”. When asked about what they understood by investment risk, around two-thirds (66 per cent) considered ‘risk of loss’ to mean losing most, if not all, of their invested savings³.
   

What UK adults want in order to be confident to invest:

• Online tools: Over a quarter (27 per cent) want access to online tools to help them decide what to invest in.
  
• Improved personalisation and comparison: One in five (19 per cent) would feel more confident if they could access more personalised information to inform their thinking.
  
• Visualisation of returns: One in seven (14 per cent) who do not currently invest said greater visual information on the potential returns available would help them to see the benefits more clearly.

Sasha Wiggins, CEO at Barclays Private Bank and Wealth Management, said:“Lack of clarity and practical advice is preventing savers from engaging with investing, leaving £430 billion of possible investments remaining in cash savings. If this UK investment gap can be narrowed, we will address two major untapped opportunities – one for the 13 million potential investors who could be earning better returns on their cash savings over the long term, and the other for UK capital markets, which could see a boost if more savers were to invest.

“The industry needs to work with Government and regulators to break down these barriers and help more savers to invest. Key to this is regulatory change. A more balanced environment is needed – one that protects investors but also allows financial providers to deliver more targeted support, without crossing the boundary between guidance and advice.”

What needs to change

To help unlock this economic growth opportunity for the benefit of the UK’s capital markets and consumers, Barclays has today set out a series of public policy recommendations⁴:

• Recommendation 1 - FCA badge to identify entry-level investment products that meet specific diversification/asset allocation criteria: To support new investors in identifying products that may suit their financial objectives, the FCA should develop a ‘badge’ for one or more entry-level investment product types that firms could use if their offering meets a specific set of diversification and asset allocation criteria suitable for that intended market of less experienced investors. 

• Recommendation 2 - Simpler sign-up journey for entry-level investments: To make investing in one of these ‘badged’ products easier, the FCA should ensure a simpler sign-up journey for these products to reduce some of the current frictions in terms of declarations, risk warnings and product documentation for entry-level investors. 

• Recommendation 3 - Regulatory changes to enable firms to suggest investment actions to customers with large cash balances, based on “people like you” personas: Government and FCA should alter the regulatory framework for the provision of financial guidance. Regulated private sector firms should be able to suggest investment actions or products to any of their own customers who are identified as holding significantly more cash than would be expected for an emergency fund. This new regulatory framework should explicitly permit consumer-facing guidance based on generic personas such as “people like you would benefit from X”.  

• Recommendation 4 - Online tool and investment guidance from MaPS: The Money and Pensions Service (MaPS) should place a renewed focus on providing public-facing generic investment guidance through its MoneyHelper brand, to include an online tool that guides individuals to the broad set of financial investment products which they may wish to consider.

• Recommendation 5 - The development of comparison tables for entry-level investment products: Government should adopt an explicit policy aim to monitor and spur the development of easily accessible comparison tables for entry-level ‘badged’ financial investment products, so that consumers can make side-to-side comparisons through best-buy tables.

Kitty Ussher, MD, Group Head of Policy Development at Barclays added: "Our research suggests two broad barriers that prevent savers from engaging with investing: difficulty identifying the right investment product to suit their financial needs, and the inability to make side-by-side comparisons of products.

"Our policy recommendations are drawn from these insights and designed to enable more savers to engage with investing in a simple and safe way."

- ENDS -

Notes to Editors

¹ The £430 billion “possible investments” figure relates to cash held by individuals with cash savings greater than £10,000 and after taking account of retaining six months’ income in cash. To calculate this figure, we analysed the FCA’s Financial Lives Survey (2022), as follows:

• The survey showed that 42 per cent of UK adults have savings above £10K. Of this group, 38 per cent were holding all assets in cash and a further 20 per cent were holding 75 per cent or more in cash. Based on the current UK adult population (52.9 million), we can estimate that at least 13 million people (or just over 24 per cent of UK adults) are  not investing where they could be.
• The FCA survey also referenced the value of individuals’ savings, within ranges. By taking the midpoint of each range, we estimated that the 13m (who hold either 100 per cent or 75 per cent of their assets in cash), could be holding cash savings worth £735bn.
• We then used linked earnings data to establish the total emergency fund required for these 13 million people - to cover six months’ worth of income - again adjusting for those who held 75 per cent or more of those savings in cash. This gave an estimated aggregated emergency fund of £304bn.
• We then subtracted this estimated emergency fund from the estimate of the total amount of cash held, to reach our estimate of the total amount of “possible investments” of approximately £430bn.
• The detailed calculation is available here: “Are there UK savers who could become investors”
• Barclays quantitative consumer research from July 2024 supports these calculations, with 33 per cent of respondents identified as having cash savings in excess of six months’ income (668 out of 2,011 total participants).

² Combination of qualitative and quantitative consumer research:

• Unless otherwise stated, the quantitative consumer research surveyed a UK representative sample of 2,011 respondents (Savanta, July 2024).
• The qualitative consumer research was conducted with 28 members of the UK public (comprised of 10 x 60-minute online triads) who had various levels of engagement with investing and cash savings in excess of six months’ income.

³ Quantitative consumer research surveyed a UK representative sample of 2,213 respondents (Savanta, August 2024).

⁴The policy recommendations were developed based on the findings from qualitative consumer research (see detail in section below), and then verified by the broader quantitative survey, with a focus on participants with cash savings in excess of six months’ income.

Barclays Public Policy Report

• The full policy paper created by Barclays’ Group Policy Development team, is available here “Empowering retail savers to engage with investing”.
  
• The paper draws on qualitative consumer research with 28 members of the UK public (comprised of 10 x 60-minute online triads) who hold cash savings in excess of six months’ income, with various levels of engagement with investing. This research explored the role of public policy in empowering savers to engage with investing by testing specific public policy territories with participants, as well as their attitudes and behaviours towards saving and investing more broadly. The report also draws on the results from the quantitative survey conducted by Savanta, specifically the results from the 668 participants within the sample who were identified as having cash savings in excess of six months’ income.
• Barclays’ Group Policy Development team creates public policy thought leadership content on behalf of Barclays. The work draws on the Bank’s expertise, data and insights, and is intended to inform the design and application of public policy solutions in response to pressing economic and societal challenges.

 About Sasha Wiggins

• Sasha Wiggins is Chief Executive of Barclays Private Bank and Wealth Management, responsible for the Bank’s digital investing business for entry level investors of all levels of experience and wealth.
• A full biography for Sasha can be read here.

For more information, contact India McMillan at india.smyth@barclays.com or Annie McQuoid at annie.mcquoid@barclays.com.

About Barclays

Our vision is to be the UK-centred leader in global finance.  We are a diversified bank with comprehensive UK consumer, corporate and wealth and private banking franchises, a leading investment bank and a strong, specialist US consumer bank.  Through these five divisions, we are working together for a better financial future for our customers, clients and communities.

For further information about Barclays, please visit our website home.barclays