Monday 18th May, London: Older investors are paying a “loyalty tax” of thousands on their investments owing to a reluctance to explore new options, research from InvestEngine finds.
The new research from InvestEngine finds that despite caring more about fees than younger generations, Baby Boomers are paying a premium by refusing to change their investing habits.
Nearly six in ten (57%) Baby Boomer investors think low fees are the most important factor when choosing investments – significantly higher than Gen Z (30%) or Millennial (42%) investors. And yet only 13% of Baby Boomers currently invest in exchange-traded funds (ETFs), one of the most widely available low-cost options.
As a result, older investors (55+) are more likely to remain in higher-cost investments such as mutual funds, with younger investors (18-34) over three times as likely to have switched into lower-cost ETFs (50% vs 12%).
By generation, two-thirds (65%) of Gen Z and Millennial investors currently hold investments in ETFs, while 96% say they have at least heard of them. By contrast, 71% of Baby Boomer investors say they are not familiar with them, despite $20 trillion now invested in them globally.
Younger investors are taking a markedly different approach to understanding investing, drawing more heavily on online communities and social media. The research shows more than four in ten (44%) Gen Z investors find recommendations from online communities are important when choosing how to invest, compared with just 3% of Baby Boomers.
The findings highlight a clear generational divide, with younger investors embracing digital platforms, automation and low-cost funds, while many older savers continue to rely on more traditional approaches that may come at a higher cost.
Andrew Prosser, Head of Investments at InvestEngine, said: “There’s a clear irony in the fact that older investors are the most focused on keeping costs down on their investments, yet appear to be the ones most wedded to costly, more traditional funds – effectively paying a loyalty tax for sticking with what they know.”
The hidden cost of sticking with old habits
While investments can fluctuate over time, fees remain one of the few factors that investors can directly control, but their long-term impact is often underestimated. For older investors approaching or in retirement, where time to recover losses is shorter, unnecessary fees can have an even greater impact on outcomes.
InvestEngine’s analysis* shows that two investors contributing £500 per month over 25 years, both achieving a 5% annual return, could see a difference of more than £40,000 if one investor was paying a 1% fee. Even investing over a shorter period of 10 years would still result in a difference of over £4,000.
When asked what would encourage them to invest in ETFs, Baby Boomers pointed to stronger long-term performance (25%) and low fees (24%) – two qualities ETFs are well-known for, suggesting awareness, rather than resistance, may be the main barrier to adoption. On top of these, older investors pointed to more education and guidance (21%) and clearer explanations from platforms (19%) as factors that could encourage ETF investment.
Prosser adds: “Even a 1% fee can add up to tens of thousands of pounds over time. For those approaching retirement, that’s money that could make a meaningful difference to their financial security.
“Younger investors are approaching this differently. Many are learning about investing through online communities, seeking out the best offers and prioritising low-cost options from the outset. With efforts to boost investing in the UK, there is an opportunity to close the gap – making it easier for all investors to access simple, transparent and low-cost ways to invest.”
The findings come as policymakers and the investment industry look to strengthen the UK’s investment culture. InvestEngine’s upcoming ETF report will explore how greater cost awareness and clearer education could help more people make informed long-term decisions.
InvestEngine charges no fees on its DIY ISA and SIPP products. In 2025 alone, it helped customers collectively avoid £30.6 million in account and trading fees, with the average customer retaining an extra £224 vs. the most expensive competitors*.
About InvestEngine
InvestEngine is a commission-free ETF investing platform for individuals and small businesses, built to make investing powerfully simple. The platform offers ISAs and pensions with no account fees, alongside easy automation and a curated range of ETF options from leading providers such as Vanguard, iShares and J.P. Morgan.
Investors can choose from a range of accounts, including a Personal Account, ISA and SIPP, while SMEs can invest through the InvestEngine Business Account.
In 2026, InvestEngine was named a Which? Recommended Provider for the third time and a Great Value provider for the second consecutive year, achieving a 100% score for fees. The company continues to gain industry recognition, being ranked #39 on Sifted’s 100 fastest growing start-ups leaderboard for the UK & Ireland.
InvestEngine is authorised and regulated by the Financial Conduct Authority (firm reference number 801128) and is covered by the Financial Services Compensation Scheme (FSCS).
Media contact: investengine@seven-
* All analyses to illustrate performance or comparison are done for illustrative purposes only and will be shared with relevant media on request.
