Having a thorough understanding of the financial products available in the country where one lives is essential for making informed decisions and managing one’s wealth effectively. In the United Kingdom, the low level of financial literacy suggests that, even today, gaps in this area remain rather significant and potentially damaging for long-term financial planning.
This assumption is supported by industry research, primarily that conducted by The Investment Association and Opinium, which found that 17% of adults have never heard of ISA Stocks and Shares, while as many as 25% of those who have “heard of it” do not know what it is or how it functions.
Initiatives to bridge the gaps are certainly not lacking, ranging from the introduction of financial education courses in schools to the free and targeted support offered by the FCA (Financial Conduct Authority) to those wishing to make informed pension-related decisions. Thanks to the web, consumers can also independently find useful informational material to reduce their gaps and gain a better understanding of the financial products they are interested in or may consider using in the future.
Once they have grasped the basic features of financial products, they can take a further step forward by seeking support from industry experts and proceed with opening an ISA, a SIPP, a GIA, such as those offered by Moneyfarm and creating an investment portfolio that aligns with their risk level and established goals, offering long-term financial security.
In this article, we will delve into the topic and try to understand what the financial knowledge and gaps of UK consumers are, and how to expand one’s understanding to make smarter decisions.
UK consumers’ financial knowledge
As mentioned in the introduction, financial skills and knowledge of savings and investment financial products are not particularly high in the UK. The gaps do not concern only Individual Savings Accounts but also other important financial products, such as SIPPs and IPPs—personal pension plans that allow for an additional sum of money upon reaching retirement age, compared to that provided by the state pension.
On the other hand, according to a Financial Conduct Authority survey, more than 40% of UK adults have savings exceeding £10,000, demonstrating at least an excellent ability to save.
Regarding investments, sources indicate a growing propensity among Gen Z representatives, a third of whom are reported to have started investing before reaching adulthood, especially through online platforms and mobile apps.
Increasing knowledge about financial products
If the financial education provided in secondary schools can help young people develop and acquire all the necessary financial skills—including those related to savings and investment products, which are now essential in everyone’s life—those who have already completed their schooling, whether recently or some time ago, must inevitably find alternative ways to fill their knowledge gaps and become more confident in financial matters.
The paths that can be followed are numerous and depend both on the level of knowledge one wishes to acquire—closely linked to the goals to be achieved—and the time available. Depending on the circumstances, one can expand their skills by consulting simple free online articles—preferably written by financial experts—reading product descriptions carefully, consulting books on the subject, or attending online or classroom courses taught by qualified personnel and specialists.
In addition to this, it is always very useful to engage with experienced financial advisors, who can not only guide choices but also help better understand the characteristics of individual products and choose those most in line with one’s financial goals and future aspirations.
