Title
Contents
Acknowledgements 7
The Authors 8
Summary 9
1. Introduction 17
1.1 Background 17
1.2 Aims and objectives 19
1.3 Research methods 19
1.3.1 Topic guide 19
1.3.2 Pilot 20
1.3.3 Fieldwork 20
1.3.4 Analysis 21
1.4 Research design 21
1.5 Research review 22
1.5.1 People's understanding of investment risk 22
1.5.2 People's attitudes to investment risk 23
1.5.3 People's understanding of, and attitudes to, investment choice 24
1.5.4 Use of terminology and language 25
1.6 Report outline 25
2. Attitudes to and understanding of financial risk 27
2.1 Attitudes to financial risk 28
2.1.1 Understanding financial risk 30
2.1.2 Risk and financial products 31
2.1.3 The role of risk and return in financial decision-making 34
3. Understanding the context: attitudes to retirement saving, the workplace pension reforms and the personal accounts scheme 35
3.1 Attitudes to saving for retirement 36
3.2 Attitudes to the workplace pension reforms and personal accounts scheme 38
3.2.1 Other issues raised 41
4. Views on investment choice 44
4.1 Fund choice 46
4.1.1 Introducing the concept of fund choice 46
4.1.2 Initial response to fund choice 47
4.1.3 Manageable number of funds 48
4.1.4 Risk parameters 48
4.1.5 Information to support fund choice 49
4.2 Individually tailored funds 50
4.2.1 Understanding of 'individually tailored' funds 50
4.2.2 Initial response to individually tailored funds 51
4.2.3 Personal preference for individually tailored funds 52
4.3 Risk-based funds 54
4.3.1 Understanding of 'risk-based' funds 54
4.3.2 Initial response to risk-based funds 55
4.3.3 Personal preference for risk-based funds 55
4.4 Balance of personal preference for individually tailored funds and risk-based funds 57
5. Other investment fund options: reactions and personal preferences 59
5.1 Guaranteed Minimum Return (GMR) funds 62
5.1.1 Understanding of GMR funds 62
5.1.2 Initial response to, and personal preference for, GMR funds 63
5.2 Socially Responsible Investment (SRI) funds 64
5.2.1 Understanding of SRI funds 64
5.2.2 Initial response to, and personal preference for, SRI funds 65
5.3 Lifestyled investment funds 67
5.3.1 Understanding of lifestyled investment funds 67
5.3.2 Initial response to, and personal preference for, lifestyled investment funds 68
5.4 Branded investment funds 69
5.4.1 Understanding of branded funds 70
5.4.2 Initial response to branded investment funds 71
5.4.3 Balance of personal preference for branded and non-branded funds 72
6. Investment choices: key factors and potential reactions 73
6.1 Key factors when choosing a fund 74
6.1.1 Most important factors 75
6.1.2 Least important factors 76
6.1.3 Charges 76
6.2 Reactions to the default fund 78
6.2.1 Understanding of the default fund 78
6.2.2 Initial response to the default fund 78
6.2.3 Features of the default fund 80
6.3 Likelihood of making an active choice 82
7. Making an active investment choice: barriers and enablers 83
7.1 Knowledge and understanding of key concepts and possible options 85
7.2 Barriers and enablers to making an active choice 86
7.3 Information and support needs 87
8. Conclusions 90
8.1 Attitudes to saving for retirement, the workplace pension reforms and the personal accounts scheme 90
8.2 Investment fund choice within the personal accounts scheme 91
8.3 Making active investment fund choices within the personal accounts scheme 92
8.4 Barriers and enablers to making an active choice 93
Appendix A. Topic guide and showcards used in group discussions 94
Appendix B. Briefing notes used by facilitators 108
Appendix C. Focus group sample design 118
Appendix D. Focus group screening questionnaire 119