In a stark assessment, the chief executive of one of the UK’s leading investment platforms has expressed scepticism over the government’s latest efforts to encourage personal investing. Andy Bell, the CEO of AJ Bell, has warned that the Chancellor’s proposed reforms to Individual Savings Accounts (Isas) are “doomed to fail” in their objective of getting more people to invest their money.
The comments come in the wake of the Autumn Budget, where Chancellor Rachel Reeves unveiled plans to overhaul the Isa system. The reforms aim to simplify the various Isa products on offer and make them more appealing to prospective investors. However, Bell believes these changes are unlikely to have the desired effect.
Speaking to financial journalists, the AJ Bell boss argued that the core issue lies in the UK’s longstanding aversion to investment risk. “The problem is not the complexity of Isas,” he said. “It’s the fact that the British public is inherently risk-averse when it comes to investing.”
Bell pointed to data showing that around 80% of Isa funds are held in cash, rather than invested in stocks, shares or other asset classes. “People are just too scared to put their money at risk, no matter how you structure the products,” he explained.
The CEO’s scepticism is bolstered by the fact that previous attempts to boost investment participation have had limited success. For instance, the introduction of the Lifetime Isa in 2017 was intended to encourage younger savers to invest for the long term, but take-up has been relatively low.
In Bell’s view, the government would be better off focusing on financial education to help address the public’s risk aversion. “If people understood investing better and felt more confident about it, that would do far more to increase investment levels than tinkering with the Isa rules,” he argued.
Analysts suggest the Chancellor’s reforms are partly motivated by a desire to stimulate the UK’s sluggish productivity growth, which has lagged behind other major economies in recent years. By encouraging more investment, the government hopes to drive business innovation and expansion, ultimately boosting economic performance.
However, the AJ Bell CEO’s comments indicate that achieving this goal may be an uphill battle. With the British public’s deep-seated aversion to investment risk, the impact of the Isa changes remains highly uncertain.
