With so much financial uncertainty, it is perhaps unsurprising that adults in the UK are trying to save more. Household saving percentages have risen to an average 7.44% over the last 2 years, compared to 3.55% for the 5 years before (ONS, 2011). Yet, according to new research last week from Defaqto, only 0.3% of the products currently offered by high street banks give any financial benefits to the basic taxpayer, due to the current high levels of inflation.

Many people want to get as much return as possible from their money but continue to leave their savings in badly performing current or savings accounts.

An answer, for some, would be to move some of their cash from savings to investments –which should usually deliver superior returns in the longer term. Only 18% of adults hold medium or long-term equity/bond investment products. (Mintel, 2010).

The level of investing is a real driver of the economy, particularly in building new productive capacity, therefore it should be an important part of government fiscal policy to encourage investment.

However, investment involves added complexity.  It is harder to understand and make decisions about where to put your money– and faced with this complexity many people do not bother. Issues include:

• Clarity – Many investment products can be hard to understand
• Language – Use of jargon and words like “Wealth management” would put off those that are merely affluent, let alone those who just want a better return for their savings.
• Costs – Fees, upfront charges and transaction costs can mean radically reduced overall returns, particularly given the effects of compound interest, so that investments are often ineffective for those with smaller holdings.
• Advice – Faced with added complexity – many would prefer advice – but regulatory changes are making it easier to see that this advice is often expensive. Advice doesn’t always need to be delivered face to face.
• Risk – There is a perception that investment can mean gambling your money.
• Tax efficiency – ISAs and pensions can deliver higher returns but can often decrease transparency.
• Not joined up – with savings and current accounts – preventing you from easily turning your investment back into cash.

Banks and other financial services providers could reduce this complexity, with simple, clear, low cost investment products, probably delivered directly over the internet but potentially as an enabler for advisers. These could allow you to input goals, select a level of risk you are comfortable with and see holdings displayed on your statement.

US Start-ups, like Betterment.com, which are focused on creating simple and easy-to-use services and built using user experience techniques, are building momentum. The UK market, however, is still under-served in this space.

Delivering an accessible, smart, goal-based investing solution could be a platform to deliver a significant market position, attracting new customers and building deeper relationships with existing ones. It could meet long-term needs for a wide range of users, as well as an introductory service for new investors and fulfilling auto –enrolment requirements for delivering pensions within companies.