About $2.1 trillion in excess cash could be mobilised into capital markets across major Organisation for Economic Co-operation and Development (OECD) countries through “modest behavioural shifts”, if backed by effective policy support, according to a report by Vanguard.
The asset manager has called for reforms to retail investment systems, warning that millions of individuals are missing out on the long-term benefits of participating in capital markets. According to its report, $2.1 trillion in excess household cash savings could be unlocked across OECD countries if more people were supported in becoming confident investors.
With ageing populations, rising fiscal strain and a shift to defined-contribution pensions, people are increasingly expected to fund their own futures — yet many aren’t investing due to systems that fail to support them, the report noted.
While there is an estimated $51.7 trillion in household savings across OECD countries, few people are investing. If just 10% of excess cash savings were redirected into capital markets, Vanguard said it would result in an injection of over $2.1 trillion. “The research suggests that many individuals could improve their long-term financial outcomes by investing in the capital markets – provided they are supported by consumer-friendly retail investment systems,” the report stated.
Reforms need to tackle not just access, but also confidence, literacy and fairness, the researchers noted. “This underutilisation of savings is particularly striking in today’s economic environment,” the paper notes, calling for policymakers to take a holistic view. “No single policy lever is sufficient,” it continues, urging governments to consider the most appropriate mix of reforms for their local markets.
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Among the top recommendations is the adoption of auto-enrolment mechanisms, particularly in retirement systems, which have already proven effective in boosting participation. Tax incentives can encourage people to invest, and default investment options can help those who lack the time or knowledge to manage their own portfolios.
The report also stressed the need for improved investor support, including access to a spectrum of advice. Regulatory frameworks, it added, should allow for digital advisory services that can be tailored to individuals’ needs and delivered at scale. Financial literacy needs improvement, with a call for research-based national strategies and regular progress tracking.
The report highlighted the risks of commission-based remuneration in investment product distribution, which it says can lead to conflicts of interest.
“Every dollar, pound, or euro paid in fees is a dollar less in potential returns,” the paper stated. “Investors should be able to easily understand and compare all-in costs to make informed decisions.”
Ultimately, Vanguard’s message is that systems need to be built not just to accommodate experienced investors, but to actively support newcomers. The firm sees enormous potential in retail investment — but only if barriers are reduced and trust is rebuilt. Its recommendations aim to create a framework where individuals feel equipped, protected, and empowered to grow their wealth over the long term. In doing so, Vanguard argues, societies can unlock the full economic potential of their household savings.
Jon Cleborne, head of Europe, Vanguard, commented: “Our research highlights that many individuals could be making their savings work harder. In the UK alone, there’s an opportunity to unlock £242 billion for long-term goals—if people have access to the right education, support and low-cost investment options. The FCA’s recent proposals for ‘targeted support’ mark a welcome step forward. With decades of investment experience, Vanguard stands ready to help individuals take control of their financial futures—with clear guidance and trusted support.”
Chris McIsaac, head of international, Vanguard, commented: “Helping individuals invest for their long-term financial future has never been more important. Our research shows that even modest changes in investor behaviour—supported by pragmatic policy measures—could help improve financial outcomes for millions. This report offers a valuable opportunity to partner with international policymakers to address the complex challenges of designing retail investment systems that benefit both individuals and capital markets.”
