Poor knowledge of investment products could be holding Britons back from achieving their financial goals as new research reveals that almost 1 in 5 people have not heard of a stocks & shares ISA.

A quarter (25%) who have heard of the investment product do not know anything about it, research from The Investment Association has revealed.

In comparison, only 2% of investors who hold at least one financial product say they have "never heard" of a stocks & shares ISA, showing the stark difference between those already holding investment products and the ignorance of the wider UK population.

Among a sample of cash ISA holders, more than a fifth (22%) said that they did not know much about investing and cash ISAs were easier to understand. The same number said that they shunned investments where values could fall.

However, with two in five (40%) cash ISA holders using the product to save for retirement, many are missing out on the growth potential of investments while exposing their savings to the detrimental impact of inflation, warned the IA.

Among the investor sample, more than half (54%) understood that investing in a stocks and shares ISA could provide a better long-term return – over five years or more – compared to a cash ISA.

That is particularly important given that many people are saving for a long-term goal such as retirement (55%) or leaving an inheritance (19%), said the IA.

Uptake across all ISA products was relatively low, but particularly true of stocks & shares ISAs. Less than a third (31%) of UK adults hold a cash ISA, and even fewer (16%) have a stocks & shares ISA.

The survey also found that men were twice as likely to have a stocks and shares ISA compared to women (21% vs 11%).

Miranda Seath, director of market insights at the Investment Association, said. “Our research has highlighted a significant knowledge gap between those who are already investing and those who are yet to get started. This means that people across the UK are missing out on the benefits and growth potential investing can bring – and that needs to change.

“The investment management industry has pledged to increase the number of people holding an investment product from just over 20% of the UK population to 75% over the next decade - matching the number who hold a cash savings account today.

“In turn, this could take advantage of the investor sentiment to back Britain. It is not only the economy that will benefit, but the millions of people across the UK that will reap the rewards investing can bring to their long-term financial security.”

• The survey fieldwork undertaken by Opinium took place between 28 February and 5 March. The IA surveyed three groups: 1,000 UK investors; 1,000 UK Cash ISA or Junior ISA holders and 2000 UK adults (18+) where the respondents were weighted to be nationally representative of the UK adult population.