With competition rife on the high street, everyone claims they have the best deal when it comes to mortgages, pensions or investments – but how much do people actually know about the features of the financial products they are purchasing?
A new study from independent financial research company Defaqto has revealed a shift in consumer shopping patterns when looking for financial products – with price being a key factor for many when it comes to making a decision.
Interestingly, the research found that almost 50% of people do not understand the features of products they currently own.
Mike Powell, Defaqto’s Insight Analyst for General Insurance, said: “In terms of specific products, we found that people tend to understand the features of their pensions and protection products, such as income protection and critical illness cover, the least.
“In addition, when asked about what products people would feel comfortable researching and buying online without professional advice, people felt least comfortable about doing so with pensions, investments and mortgages.”
Despite this apparent lack of understanding surrounding the features of financial products – with the research finding that a quarter of people admit they fear purchasing a mortgage or pension which isn’t right for them – the majority are now turning to price comparison websites when they want to know the options out there.
However, experts have voiced concerns about this shift in behaviour which has left nearly 70% of people saying that cost is very important to their financial decision making; a priority which can often be dangerous and counterproductive for consumers, who risk buying the wrong product and paying extra for the damage of their mistake later.
Defaqto has today launched its 2012 Star Ratings to help people base their financial decisions on the features and benefits products provide, not just how much they cost, and to better understand what financial products offer.
Taking a wide range of features and benefits into account, Defaqto have given each product a rating from 1 to 5 depending on how comprehensive they are.