Fidelity warns of 'investment identity gap' as UK savers shun retail investing

Fidelity said UK savers are not identifying as investors in sufficient numbers, creating an "investment identity gap" that could leave millions unprepared for long-term financial needs.

The asset manager's research, based on a survey of 1,000 UK retail investors, found that more than half of respondents were more likely to describe themselves as a "saver" than an "investor" despite widespread participation in investment vehicles. Seventy-four percent reported taking part in a workplace pension and 68 percent held a stocks and shares Isa, yet 57 percent described themselves as "unengaged."

Fidelity's head of retail, James Carter, said the pattern points to a cultural and confidence problem rather than an absence of products. "There was a time when investing conjured images of pinstripe suits and frantic trading floors," he said, noting that many people still view investing as something for "someone else." The perception that investors must be wealthy or professional remains widespread: 17 percent of respondents said investing is only for professionals, 15 percent said it is just for the wealthy, and 12 percent believed you needed at least £50,000 in assets to be considered an investor.

The survey found, however, that not all attitudes are exclusionary. Some 44 percent of investors recognised that opportunities exist for people of differing incomes, backgrounds and expertise. Fidelity and Carter argued that the dominant cultural preference for cash savings persists in part because cash feels safer, even though prolonged reliance on cash can erode purchasing power through inflation and increase the risk of failing to meet long-term goals such as retirement.

Carter urged a reframe of how risk is communicated, saying regulators and the industry should emphasise time horizons as much as short-term market volatility. "Risk needs to be framed around the possibility of not meeting long-term financial goals, not only the potential for short-term loss," he said. Fidelity welcomed the government-backed, industry-led review of investment risk warnings and said a better balance — including clearer communication about the risks of cash products — could help consumers make more informed choices.

Practical measures proposed by Fidelity include simplifying product ranges, consolidating overlapping Isa options and improving the clarity of risk information. The firm pointed to regulatory changes scheduled to take effect next April under so-called "Targeted Support" proposals, which will allow regulated firms to offer more personalised suggestions based on common customer needs. Fidelity described those changes as a potential bridge between guidance and regulated advice that could increase consumer confidence.

Industry participants have also pushed for simpler entry points and tools that make starting to invest easier. Carter recommended encouraging small, regular investments to build experience and resilience against short-term market swings, rather than expecting new investors to make large, one-off commitments. He said clearer, supportive communication and fewer, easier-to-understand products could help more people view investing as a normal part of long-term planning.

Platform options cited by consumer guides include established companies such as AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine and Trading 212; firms differ on fees, product scope and tools, and Fidelity emphasised that product simplification should not sacrifice consumer protection.

Fidelity's analysis also referenced a broader international context, saying the UK records some of the lowest retail investment participation among G7 countries despite high nominal take-up of workplace pensions and Isas. The firm and Carter said reversing the trend will take time but argued policy changes, adjusted industry practice and targeted education could reduce the identity gap and improve long-term outcomes for savers who do not yet see themselves as investors.

Regulators, providers and consumer groups have in recent years focused on financial literacy, simplified product design and clearer consumer-facing communications. Fidelity said those efforts, alongside revised risk warnings and the Targeted Support framework, could help more people take small steps into investing and close the divide between holding investment products and feeling like an investor.