Most households spend more time shopping for TVs than an ISA

By Moriah Costa on Thursday 31 August 2017

Alternative Lending

High earners are more likely to shop for large household purchases than compare investment services, new research found.

High earners are more likely to shop for large household purchases than compare investment services, new research found.  

Only half of high earners in the UK compare the quality and price of their investment services, research from the Alliance Trust Savings has found.

In comparison, the online investing company found that 87 per cent of those with a household income of £100,000 or more will spend time shopping around for large household items like a washing machine or TV.

People shop around even less for professional financial services. Just 28 per cent of the 500 respondents will compare financial advice or accountant services.

“Consumers are very willing to shop around online when the information is easy to digest, but less inclined to do so when comparison takes more time and consideration,” said Sara Wilson, head of platform proposition at Alliance Trust Savings. “People are very savvy when it comes to saving money on big ticket household items like washing machines, but it seems they are less aware of the difference comparing fees can make when buying investment products like ISAs and pensions.”

While this research is based on ISA and pension users, it could be be bad news for peer-to-peer lenders which offer the Innovative Finance ISA.

The IFISA on average offers a better headline return than a typical cash and savings ISA, but it does have capital risk. One of the largest P2P lenders, Zopa, which launched its IFISA in June, offers a targeted return of up to 6.1 per cent. Returns of other IFISAs vary but range from a target of 5 per cent at Kuflink to up to 10 per cent at Property Crowd.

The IFISA was launched by former Chancellor George Osborne in April 2016 and allows individuals to include income from P2P platforms as part of the current £20,000 tax-wrapper allowance.

With lots of investment options available, P2P lenders will need to educate the public about what the IFISA if they hope to gain a sizable chunk of the ISA market; but education may prove futile if people are simply unwilling to shop around. 

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