More than 19 million British adults suffer financial paralysis and do not feel in control of their financial future

The UK could be heading for another financial crisis, with 38% of the British public – over 19 million people – feeling as though they don’t have enough knowledge, confidence or money to invest for their future.  In research by TD Direct Investing (, these 19 million people have been classified as ‘Naked Investors’, a phenomenon which is causing financial paralysis in the UK and was unearthed following an extensive study of 2,762 people, conducted by the Future Foundation.

What is the Naked Investor phenomenon and why should Britain be concerned?

Whilst the worst of the financial crisis may be behind us, much of Britain is still financially vulnerable, due in part to continuing austerity measures, record low interest rates and diminishing government support. Yet, while Britons are overwhelmingly aware (81% of respondents) that they should take responsibility for their finances, for the most part they feel incapable of doing so. Nearly one in three people (31%) have a perception that they don’t have enough money to invest – despite most having over £500 in investible assets – with a lack of financial knowledge (23%) and lack of confidence (16%) affecting around one in five.

The research highlighted huge gaps – across all sections of society – between the desire to do something and the perceived ability to do so. A quarter of all people surveyed (25%) said they didn’t feel confident in their ability to make good financial decisions.


John Tracy, CEO of TD Direct Investing, said:

I appreciate these findings are quite stark, but they also highlight a widespread desire for people to improve their financial futures – and this is a good thing.  The main issue to address is education. Most people are familiar with banking products and cash ISAs, but not enough people are talking about investing and this is creating this sense of financial paralysis.

“Our Naked Investor research identified some groups that were more exposed than others – women, Gen Y and the over 55s. In particular, those that are in the Generation Y camp could be missing out on years of investing that would help give them the financial future they want.

“Whilst the findings are worrying, the time is right for people to start taking control with growth in digital and self-direction, more flexibility in terms of pensions and ISAs and better education available to consumers who just want to get going. It’s also never been more important with interest rates continuing at record lows, people living longer and doubts over the stability of the UK’s pension system.

One of the key issues identified by the research relates to a complete lack of belief that the state will support people at retirement age, with only 20% confident that this will happen. In addition, just 40% believed they were knowledgeable about financial matters and therefore able to fill the state void. This dropped to 32% when focused on women. The Gen Y group was most likely to say that sufficient government support would be there when they reached retirement. Could this disillusion about the state pensions system be preventing them from taking action?

John Tracy continued: “There is still more that companies like us and the government can do. We need to work hard on building consumer confidence and knowledge to directly address these perceived barriers and get the solutions in front of consumers. People can start investing from just £25 per month – but how widely known is this? Earlier intervention in schools and colleges will massively help future generations.”

Sarah Pennells, founder of the UK’s leading money website for women, added:

This research on gender differences echoes what I’ve found on SavvyWoman. Women I talk to are interested in investing, but many don’t know where to start and are worried about ‘getting it wrong’.  In the past, the investment industry didn’t see women as their target customer, although – thankfully – that is changing.

“The truth is that the state pension won’t provide a decent retirement income. Even after the changes next April it’s likely to be little more than £20 a day to live on. The changes to the financial advice market in the last couple of years mean that more people will have to make decisions about their finances for themselves and unfortunately, after more than five years of low savings rates, leaving all your money in the bank isn’t likely to produce the return most people need.

TD Direct Investing has also identified a series of consumer groups that investors and non-investors fall into. This is a helpful first step to working out whether you are a Naked Investor and can be found at In direct response to the research, TD has also developed a simple charter to follow to help people increase their financial confidence.

Three sections of society were identified as particularly at risk; women, the over 55 age bracket and the so-called Y generation (16-34s):

Gender differences:

More than half of men and women enjoy managing their finances, 55% and 54% respectively, but:

• Women are more likely to fall within the Naked Investor category, with 42% being counted as Naked Investors compared to 34% of men

• Women (29%) are more likely to say that they don’t feel confident in their ability to make good financial decisions compared with 20% of than men

• Men (47%) are more likely to say they are knowledgeable in financial matters compared with 32% of women

• The research revealed that only 21% of women currently have an investment portfolio, versus 34% of men

• Amongst those who do have an investment portfolio, only 40% of women currently manage their own, compared to 63% of men

Generation Y (also known as Millennials):

• More than a third (34%) of those aged between 16 and 34 feel confident about their financial decision-making – more than in any other age group (for example, 17% for those aged 55+)

• This age group likes to talk about financial matters (39%) and wants to appear financially knowledgeable to their peers (44%), but are most likely to pin their hopes on state support in retirement (31%)

• The knowledge gap stops this age group from proactively investing, with just under half (45%) believing it is better to put money into a savings account rather than in an investment portfolio

Over 55s:

• The 55-64 demographic has a high proportion of Naked Investors (42%)

• The number of people living to over 100 years old has increased by 72% in the last year alone, but the majority of people are not factoring longer living into their retirement plans

• This demographic is very interested in developing their knowledge and believe in ‘leisure time with purpose’ – undertaking hobbies which also provide them with new skills and experiences

• A large number of over 55’s (89%) believe you are never too old to learn new skills

• Only 25% of those aged 55+ felt financial products were targeted at their age group

Regional differences:

Yorkshire and the North East have the highest proportion of Naked Investors, making up 44% of their respective populations, and the North West the least, with 31%.

Full regional breakdown in descending order:

• 44% of our sample in the North East are Naked Investors (NI)

• 44% in Yorkshire are NI

• 42% in East Anglia are NI

• 41% in the South West are NI

• 41% in Wales are NI

• 39% in the West Midlands are NI

• 37% in Scotland are NI

• 37% in Greater London are NI

• 37% in the South East are NI

• 36% in the East Midlands are NI

• 31% in the North West are NI

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