Financial certainty among Irish Consumers reaches new low

Irish Brokers reporting significant fall off in pension investment – Friends First Broker Barometer

Business confidence among Irish brokers has deteriorated significantly in the last six months with 55% of those surveyed expecting the Irish economy to deteriorate in the next 12 months. Among brokers surveyed in November, only 21% expect the Irish economy to improve over the next 12 months compared with 44% in May 2010. Confidence levels have ebbed back to levels experienced in May 2009 (18%), according to the Friends First Broker Barometer, published today in association with Millward Brown Lansdowne.

This research was carried out across a sample of 100 independent brokers nationwide to gauge the attitudes and perceptions of brokers to their own business and the economy that they are currently operating in. As part of the survey, we also attempted to capture the perceived view of brokers’ clients.

According to the Friends First Broker Barometer, the recent economic uncertainty and has reversed any resurgence in consumer confidence. Brokers are reporting that:

• 97% of consumers find it difficult to get finance from banks 
• 97% of consumers have little confidence to spend
• 68% do not believe the worst of the recession is behind them
• 93% believe the country’s international image is vital to its recovery

“Our research was carried a week before the EU/IMF bailout and we can see that the mood among consumers and financial advisors has taken a real hit. People are worried about making ends meet day to day and their ability to invest funds for the future, is as a result, reduced,” according to Eamonn Twomey, Head of Marketing with Friends First.

According to the brokers interviewed;

• 73% of consumers are very concerned about further tax increases
• 59% of consumers are very concerned about debt repayments
• 49% are very concerned about mortgage repayments
• 58% are very concerned about job security
• While 50% are worried about the security of their saving in the banks

In relation to possible changes within the financial services sector, a growing number of brokers (25%), believe there will increased collaboration between brokers and life companies in the future and increase of 5% since May 2010.

On pension investment, 84% of brokers surveyed believe that the introduction of a 33% rate of pension relief is a negative move which will deter people from making adequate pension provision. The survey was carried out before the publication of the 4 year plan which proposes the pension reliefs will be reduced downwards to 20%. 68% of brokers also reported that their clients are already reducing their pension contributions as a result of financial constraints – an increase of 17% since May 2010.

“The results of this survey are very worrying, the current economic downturn is having a real impact on people’s ability to save for their retirement and the Government’s decision to further cut reliefs in the 4 year plan, will compound this issue further. The proposed reductions to pension reliefs must be reversed, otherwise in thirty years time there will be a new poor who will be totally dependent on the State - those who have not made adequate pension provision", warns Eamonn Twomey, Friends First.

On investment choices – 50% of brokers believe that equities are the best long term choices for pensions and will deliver the best results. They are however reporting that guaranteed funds are proving popular with clients (51%). Only 4% of brokers surveyed believe that their consumers would be very interested in an Irish Infrastructure Bond and as few as 2% believe that their consumers would be very interested in an Irish Government Recover Bond.