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Savers spooked away from stocks and shares ISAs


If you are covering the new ISA statistics from HMRC, please see the following comment from Rachael Griffin, tax and financial planning expert at Quilter:

"It is encouraging that ISA subscriptions were up overall in the last tax year, which on the face of it seems positive. Almost 1 million additional ISA subscriptions were made compared to the previous tax year. However, people have chosen to invest predominantly in Cash ISAs with an extra 1.4m people choosing this type of account compared to 2017-18. Comparatively, the number of people choosing to put their money to work in a stocks and shares ISAs has fallen by 450,000. This means that Cash ISAs now boast a 76% share (up from 70% last year) of the ISA market compared to other types of account.

"This increase in the use of Cash ISA’s may have been driven by the politically turbulent period resulting from Brexit looming over the country. This could have forced people to take lower risks with their savings as they were scared of volatile stock markets.

"While it is understandable that savers may have been spooked, it’s wise to take a long term view when saving or investing. Over a longer period compound returns can deliver rewards for investors that commit to saving through a stocks and shares Isa, and this is growing more appealing since the coronavirus pandemic has forced us into a historically and likely prolonged low interest rate environment meaning that the returns from cash will be meagre. In fact, at present according to Moneyfacts the average Cash ISA interest rate stands at just 0.80% for an easy access account meaning that when you take into account inflation savers have made next to nothing.

"There continues to be a gender divide with men still more likely to save into stocks and shares and lower income households much more likely to favour a cash Isa and higher income holders more likely to invest in stocks and shares.

"While overall the data shows that around £67.5 billion was subscribed to Adult ISAs in 2018-19, an increase of £2.3 billion compared to previous years, this increase was driven largely by the rise in cash ISA subscriptions, which increased by £7.3 billion. The amounts subscribed to stocks and shares ISAs fell by £5.2 billion from 2017-18. But it seems that individual savers were struggling to put as much away as the average subscription now stands at £6,049, a 6% decrease from last year. As the savings limit for ISAs now stands at £20,000, the average ISA holder has around £14,000 of unused allowance each year.

"The Isa, now 20 years old, has been enormously successful. By exempting individuals from tax on interest, dividends and capital gains, it has created a fantastic incentive to save and invest, and individuals continue to take advantage of that in order to invest in their own future and set money aside for their family and it is hugely positive that the number of people choosing to use any form of them has increased. However, more needs to be done to educate people about the long-term benefits of putting their money to work in the markets.

"For anyone considering investing in an Isa, there are lots of options available and it is well worth considering speaking to a financial adviser. They will assess your own personal financial needs and help to identify an investment plan that sets aside the right amount and allocates it to an investment that is suited to you.”

For more information contact

James Ventress020 7002 402507884

Notes to Editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £95.3 billion in customer investments (as at 31 March 2020).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions; and discretionary fund management.

The business is comprised of two segments: Advice and Wealth Management and Wealth Platforms.

Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

Wealth Platforms includes Old Mutual Wealth UK platform and Quilter International, including AAM Advisory in Singapore.

The Old Mutual Wealth Heritage life assurance business was acquired by ReAssure Group Plc on 2 January 2020.

Since its IPO in June 2018, Quilter plc’s businesses have progressively rebranded to Quilter, as follows: 

  • Quilter Financial Planning (previously Intrinsic)
  • Quilter Private Client Advisers (previously Old Mutual Wealth Private Client Advisers)
  • Quilter Financial Advisers (previously Charles Derby Group)
  • Quilter Financial Adviser School
  • Quilter Cheviot
  • Quilter Investors
  • Old Mutual Wealth (becoming Quilter Investment Platform)
  • Quilter International (previously Old Mutual International)

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.