For intermediaries only

Aegon’s investment risk index

Page 2 | Aegon’s investment risk index

At Aegon, we understand the importance of investment choice and the role that risk vs return plays. We set out to evaluate UK consumers’ attitudes to investment risk, to determine what might be standing in the way of individuals taking more risk when it comes to their investments and to discover if age or location impacts risk appetite.

The information in this report is based on research among more than 2,000 UK adults and the sample has been weighted to be nationally representative.

Overview

Overall, British people avoid investment risksThe research findings show that in general British people are risk-averse, more so than they were 10 years ago, with the fear of losing money and uncertainty about where to invest holding them back from taking risks with their savings and investments.

UK consumers tend to avoid taking risks with their savings and investments

Just 6% said their family and friends would describe them as a risk taker

41%

said they would prefer to avoid

investment risks at all costs

Just one in ten (11%) said they're comfortable taking

investment risks

30% said that being financially cautious is

incredibly important to them

Just 6% said their family and friends would describe them as a risk taker

Page 3 | Aegon’s investment risk index

Fear and uncertainty hold people back from taking investment risks

Brits risk potential high returns for minimal risksResearch shows that over half (56%) of those surveyed admit that their risk appetite is low or zero, preferring lower returns for minimal potential loss. Just 13% said they would opt for either high or adventurous levels of risk in return for high or very high long-term returns.

67% said they would be unlikely to invest any extra money they have into riskier investments,

such as stocks and shares within the next year.

16% are unsure of the best

investment strategy to use.

28% said that concerns about making a wrong decision impacts their attitude to

taking risks with their savings and investments.

Attitudes to risk now compared to ten years ago

While attitudes to risk have broadly remained static over the past decade, one in ten (12%) are more cautious now saying that their attitude to financial risk has decreased. Of those who said they're more risk-averse now than they were 10 years ago:

46% have less disposable income to risk

19% are nearing retirement and want to preserve wealth

12% are uncertain about the best investment strategy to use

4% 9%

31%

26%

29%

Zero risk appetite - cash savings rate over the long term

Adventurous risk appetite - for very high long term returns

Low risk appetite - modest long term returns

Medium risk appetite- for reasonable long term returns

High risk appetite- for high long term returns

Page 4 | Aegon’s investment risk index

Age, gender and location impacts investment risk appetite

Scotland

North East

North West

West Midlands

East of England

London

South East

South West

Wales

Yorkshire and the Humber

East Midlands

4 Financial wellbeing report

There is significant variation in the investment appetite of consumers depending on whether you are male or female, how old you are and where you live in the UK.

Percentage with low or zero approach to investment risk

Regional risk levels

Northern Ireland

Percentage who are unlikely to invest any extra money into riskier investments, such as stocks and shares in the next year

56%

50%

63%

59%

56%

52%

70%

52%

53%

54%

47%

70%

68%

61%

71%

61%

72%

60%

66%

71%

77%

74%

58% 64%

While overall British people are risk-averse, with over half (56%) of those surveyed across the country opting for lower returns for minimal risk, attitudes towards investment risk varies across the country. Similarly, when it comes to putting money into riskier investment strategies, such as stocks and shares, certain regions are more unlikely than others to invest any extra money into these strategies, compared to a UK average of 67%.

Page 5 | Aegon’s investment risk index

0 %

5 %

10 %

15 %

20 %

25 %

30 %

35 %

40 %

45 %

50 %

Age 18-34 Age 35-54 Age 55+

I prefer to avoid risk at all costs

Being financially cautious is incredibly

important to me

My family and friends would describe me as

cautious

My family and friends would describe me as

a risk taker

I am comfortable

taking risks and have done so

with my money

My main goal is maximising long

term investments and I am willing to

accept dramatic short-term losses in value to achieve this

Millennials (those aged 22 - 37) are willing to take greater investment risks than their parents

When thinking about your finances, how would you define your attitude to risk?

13% of those aged 18-34 say

they're comfortable taking investment risks and have done so with their money, compared to just 7% of

those aged over 55.

12%

of millennials say their family and friends would describe

them as a risk taker, compared to just 2% of those

aged over 55.

14% of millennials say they

have a high risk appetite, compared to just 4% of those aged 55 and over.

Consumers are unsure about where to turn for guidance on investments

The findings show that many consumers don’t know where to access advice or guidance about their investments and as a result lack understanding about investment risk or potential.

31% said they would be most likely to trust money influencers such as Martin Lewis when it comes to guidance on what to do with extra disposable income, 12% said websites of financial businesses and 6% said media coverage

20% of those aged 18-34 said that if they heard people had made a large return on a particular investment, they wouldn’t want to miss out and would try and copy that investment strategy

80% of those surveyed said that they have not sought financial advice on how best to manage savings and investments and approach to risk

17% of men say that they're comfortable taking risks with their investments, compared to just 6% of women

47% of women prefer to avoid financial risk at all costs vs 35% of men

31% of women compared to 25% of men ranked concerns about making a wrong decision as most likely to impact their attitude to taking risks with savings and investments

18% of men would describe their investment risk appetite as high or adventurous compared to just 8% of women

24% of men compared to 14% of women said that they would be likely to invest any extra money they have into riskier investments such as stocks and shares in the next year

51% of men are confident that their chosen investments will deliver strong returns over the next five to ten years, compared to 34% of women

Men are more likely to take risks with their investments than women

Aegon is a brand name of Scottish Equitable plc (No. SC144517) and Aegon Investment Solutions Ltd (No. SC394519) registered in Scotland, registered office: Edinburgh Park, Edinburgh, EH12 9SE. Both are Aegon companies. Scottish Equitable plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Aegon Investment Solutions Ltd is authorised and regulated by the Financial Conduct Authority. Their Financial Services Register numbers are 165548 and 543123 respectively. ©Aegon 2018

INV383008 12/18

aegon.co.uk @aegonuk Aegon UK Aegon UK

Further informationAt Aegon, we know how important it is to support investors to make decisions that help them to achieve their financial goals and meet their risk appetite. We offer a range of investment products to meet the needs of different investment risk appetites. We equip investors with the facts they need to make informed decisions about how much risk they should take based on timescale and life stage.

A financial adviser can help you to build a savings and investment plan that could make all the difference to your financial future. They can talk you through the benefits, risks, charges and tax implications of different savings options, and have access to the latest product research. You can find a financial adviser near you by using unbiased.co.uk or moneyadviceservice.org.uk.

For further information about the range of investment products Aegon offers, visit: aegon.co.uk/about-aegon/investments.html

Please remember that investment returns are not guaranteed and the value of any investment can go down as well as up. There’s a chance you could get back less than you invested.