One in three Irish consumers do not know how their investments have performed over the past year despite an increase in the number of people saving and investing, according to new research from the Irish Banking Federation (IBF).
Far too little attention is also given to planning for the future, the IBF Personal Asset Profile survey of 800 adults found. The survey, undertaken by Amárach Consulting on behalf of the IBF, shows that nine out of 10 consumers are saving or investing, with two-thirds of them doing so on a regular basis.
However, it found that consumers are not doing enough to promote their financial interests. A total of 35 per cent do not regularly review their investment's performance, while 32 per cent do not know how their investments have performed in the past year. Greater importance is attached to the level of return expected from an investment or savings product and the level of risk involved than understanding the product, the research found.
Nevertheless, more than three-quarters of respondents said they like to have some level of involvement when making important financial decisions, while 56 per cent said they like to have a high level of involvement. The rationale for saving is driven by current needs rather than future plans. While many "sensible reasons" were given for saving, such as saving for a deposit for a home, to "save for a rainy day" was seen as the least important reason, with half of consumers regarding it as not very important.
The trends indicate a strong preference for saving over investment - seven out of 10 compared with three out of 10 - highlighting an unwillingness to take risks when considering financial products.
"We are a risk-averse nation. In general, 78 per cent are cautious about risk and that follows through to financial risk," said Michael McLoughlin, managing director of Amárach.
As many people are influenced by a friend or family member's financial advice as that of a financial adviser with a financial institution when making investment decisions, the survey said.
Consumers are not planning for the future, according to the research, which revealed that 26 per cent of consumers have nothing in place as a potential source of retirement income.
Eight out of 10 consumers have never made additional voluntary contributions (AVCs) to a personal retirement savings account or pension and nearly 70 per cent do not plan to make AVCs.
IBF chief executive Pat Farrell said there was a mismatch between when people would like to retire and providing for that retirement. Some 54 per cent have not made a will and more than two-thirds do not intend to in the next year, the research found.
