The findings come from research conducted by BlackRock which looked at the sentiment of advisers and investors in the UK, Italy and Germany towards investing, regulation and retirement.
BlackRock found that in Britain investors hope to achieve an annual household retirement income of £27,400, but think they will need to save only £259,000 to reach this goal. However, in order to achieve their expected income investors would in fact need to save £525,000.
The current reality for pensioners in the UK is further from this still, with the average single British pensioner receiving just £15,500 in annual income.
The asset manager, which was conducting this research for a second year, found a similar story in Germany where, despite expecting an annual retirement household income of €44,000, respondents believed they would only need to save €183,000.
Again, the investor’s expectation is far behind the reality as, in order to receive a €44,000 income, investors would actually need a pension pot of more than €1m – more than five times expectations.
A similar story played out in Italy, where investors underestimated their retirement saving requirements by more than €500,000.
However, speaking at a press briefing this morning, Alex Hoctor-Duncan, head of retail for Europe, Middle East and Africa, said the knowledge gap presents an opportunity for advisers and that increasingly investors were turning to professional services for advice.
“People are perhaps beginning to realise they can go and ask a question somewhere other than google, which seems to be the most important way of disseminating information at the moment,” said Hoctor-Duncan.
There is however a long way to go, with still very low numbers of consumers choosing to use a financial adviser. BlackRock’s Investor Pulse Survey found the take up of advice in the UK, Germany and Italy was only 14%, 17% and 21% respectively, although around 15% of respondents in each country said they “are considering” getting financial advice.
Of those who did take financial advice, a bright picture emerged in all three countries, with more than 90% of respondents indicating “high satisfaction” with their overall financial plan (96% in the UK) and almost 90% of respondents in all three countries also saying they considered it “value for money” (94% in the UK).
Tony Stenning, head of UK retail at BlackRock said advisers should be encouraged by the results.
“Our research shows that those who do take financial advice are more positive and more in control of their financial future than those who don’t.
“Furthermore, they feel more confident in making the right savings and investment decisions, which is ever more important as there is an increasing onus on individuals to take more responsibility over their financial futures.”
