Wealth in the G7: How Do We Compare?
One of the nation’s largest investment managers has examined investors’ attitudes in the UK relative to other major developed G7 nations with interesting results.
So, are we investing wisely compared to the rest of the G7?
Personal wealth distribution
| Housing | Pension | Cash | Bonds | Shares & Funds | Life Assurance | Other | |
| UK | 50% | 19% | 15% | 0% | 8% | 5% | 3% |
| US | 26% | 17% | 10% | 3% | 33% | 1% | 9% |
| Germany | 57% | 6% | 16% | 1% | 9% | 6% | 5% |
| France | 52% | 12% | 13% | 0% | 13% | 1% | 9% |
| Italy | 46% | 9% | 14% | 2% | 19% | 0% | 10% |
| Japan | 37% | 16% | 35% | 1% | 9% | 0% | 2% |
| Canada | 43% | 15% | 11% | 1% | 22% | 0% | 8% |
| Average | 44% | 13% | 16% | 1% | 16% | 2% | 7% |
Based on abrdn analysis of data from individual countries’ financial accounts.
In recent years, Chancellors of both main political parties have spoken about encouraging investment in UK shares. Their focus has been on persuading pension funds to show more interest, not least because of billions held in retirement savings. The days of persuading Joe Public to become an equity investor through privatisation campaigns have long passed. Arguably, the most recent effort to stimulate individual investment in the UK stock market (individual savings accounts (ISAs)) has suffered years of benign neglect – the main contribution limit of £20,000 was last increased in 2017 and, following last year’s October’s Budget, is now set to remain at that level until at least April 2030.
UK Share Ownership Lagging Behind
It is perhaps unsurprising, therefore, that a recent report from abrdn, the investment managers, showed the UK placed last in the G7 in a table of individual share and mutual fund ownership. At the opposite end of the rankings was the US, where a third of individual wealth is riding on stock market assets.
The Allure of Bricks and Mortar
The asset class of choice by far in the UK – and for European G7 members – is housing. Surveys regularly highlight the UK’s love of bricks and mortar. Research accompanying abrdn’s report revealed that almost half of UK adults prefer property as a long-term investment strategy over pensions.
Pensions and Risk Aversion
Despite that view, the UK comes top in terms of pension asset ownership across the G7. The main driver behind that is probably UK State Pension provision, which is easily the worst in the G7 for an average earner. Even the US, not a country known for state welfare provision, delivers almost twice as much state pension, according to OECD research.
There is a case to be made for saying that the average UK individual, with almost two thirds of their wealth in cash and property, is too risk averse – as indeed are most Europeans. One reason for that may be financial literacy. In the US, products such as 401(k) pension plans have long created an awareness of investment in shares and the potential returns available.
Are you concerned about your investment strategy and how it compares to your peers? Chartwell’s expert advisors can provide personalised guidance to help you diversify your portfolio, understand your risk tolerance, and make informed investment decisions. Contact us today for a consultation.
