Investor Metrics: Retail Customer and Private Client Behaviour in UK Security-Based Investments

Table of Contents

0.0 EXECUTIVE SUMMARY

• Certain categories of consumer are especially likely to be classifiable as retail investors
• … including the retired, the self-employed and those living in London and Greater London
• Almost a quarter of retail invs. are willing to take calculated risks but frequent traders are scarce
• Individuals are most likely to be classifiable as retail investors by virtue of holding an equity ISA
• Pen. rates for most products are at least double among retail clients with over £25,000 invested
• Retail investors appear to be showing an increasing interest in funds investing outside of the UK
• … with a significant percentage also holding funds focusing on specific business sectors
• … or promising particular invest. styles, although few appear motivated by ethical considerations
• Many retail customers still prefer making investment decisions in a face-to-face environment
• … with little evidence for a significant shift towards utilisation of the Internet as a dist. interface
• Recognition and utilisation rates of on-line fund supermarkets and discount brokers remain low
• Mainstream financial services providers inspire the highest ratings for awareness and trust
• … although specialist investment management firms score more highly among wealthier investors
• Six fund managers sit in the ‘golden quadrant’ of numerous and wealthy retail investors

1.0 INTRODUCTION

• Research rationale
• The study discloses a variety of hitherto unpublished metrics about the market
• Research sample and mechanics
• Finaccord
• Other UK consumer research publications
• IPT / Tpoll

2.0 MARKET ANALYSIS

• Introduction
• Consumers classifiable as retail investors
• Market overview
• A significant proportion of consumers have at least some exposure to security-based invs
• What is the value of their funds committed to security-based investments?
• The segmentation of the latest sample is very similar to that recorded by the original investigation
• What is their age profile?
• The percentage of all consumers classifiable as retail investors rises in line with increasing age
• What is their household income profile?
• … with a similar finding visible if respondents are split by annual household income
• What is their geographic profile?
• Wealthier retail investors are most likely to be found in London and the wider South-East region
• What is the impact of having children?
• Number of children aged under 25 has little influence on holdings of security-based investments
• What is the impact of employment status?
• Wealthier invs. are particularly prevalent among the retired and self-employed constituencies
• Analysis by type of security-based investment
• Current penetration
• Consumers are most likely to be defined as retail investors through holding equity ISAs
• … although holdings of both Child Trust Funds and SIPPs appear to be increasing
• For most products, pen. rates are far higher among those with more than £25,000 invested
• Intention to purchase
• Interest in OEICs, unit trusts and investment trusts appears to be declining among retail investors
• Analysis by primary underlying instrument of investment
• Current penetration
• Holdings among retail invs. exceed 10% only in the case of equity funds and balanced funds
• … with more exotic options appealing mainly to those with a portfolio worth more than £25,000
• Intention to purchase
• Equity-based funds and balanced funds also dominate likely retail investment in 2008
• Analysis by specific geography of investment
• Current penetration
• Retail investors may be increasingly inclined to consider funds investing in overseas securities
• … with the popularity of funds investing solely in UK equities having fallen over the last two years
• Intention to purchase
• With the exception of the UK, no specific geography will attract more than 5% of retail investors
• Analysis by specific business sector of investment
• Current penetration
• Over 10% of retail investors claim to have allocated capital to specialist financial sector funds
• Intention to purchase
• Funds investing in the shares of ‘green’ energy firms seem likely to attract investment in 2008
• Analysis by style of investment
• Current penetration
• Products oriented towards producing capital growth are the most popular option
• … with guaranteed or protected funds also achieving a penetration rate in excess of 10%
• Intention to purchase
• It remains the case that few retail investors seem to be motivated by ethical considerations
• Risk appetite and trading frequency of retail investors
• Risk appetite
• Almost one third of wealthier investors state that they are willing to take calculated risks
• Buying and selling frequency
• … although a majority even of this group buy or sell investments once a year or less on average
• Distribution interface / channel behaviour of retail investors
• Self-direction and financial advice - current behaviour
• The proportion of retail investors claiming to be totally self-directed has risen slightly
• Distribution interfaces - current behaviour
• A majority of retail investors still prefer to make new investments in a face-to-face environment
• Distribution channels - current behaviour
• High street banks and building societies continue to outgun other distribution channels
• Distribution interfaces - future behaviour
• A rise in use of the Internet will occur only at the expense of other remote distribution interfaces
• Distribution channels - future behaviour
• … and it remains doubtful whether fund supermarkets can turn forecast into actual progress
• Key factors determining choice of investment manager
• Historic performance of the investment manager remains the most important factor
• … with retail investors least likely to choose a fund manager on the basis of its brand
• … although numerous other factors also have a bearing on the behaviour of retail investors
• Awareness and usage of fund supermarkets and discount brokers
• Barclays Funds Market and Hargreaves Lansdown record the highest utilisation rates
• … with Saga scoring most highly in terms of overall awareness among retail investors

3.0 COMPETITOR ANALYSIS

• Introduction
• Awareness
• Awareness rates are highest for companies providing a broad range of financial services
• … with specialist investment managers excluded from the top ten for overall recognition
• A majority of customers have a limited knowledge only of the wider market for investments
• Allianz Global Investors has probably been most successful in improving its recognition rating
• More affluent investors tend to have higher awareness levels of investment management firms
• … with only two providers scoring more highly among investors with holdings below £25,000
• Trust
• Specialist investment managers tend to achieve a higher ranking for trust than for awareness
• Schroders has achieved a significant improvement in its ranking for trust since the original survey
• Wealthier retail investors are more inclined to trust specialist investment management firms
• … with the difference particularly marked in the case of many of the larger investment managers
• The correlation between scores for awareness and for trust among retail invs. is almost perfect
• Usage
• Only one investment management firm is used by more than three in ten retail investors
• Specialist fund managers achieve significantly higher utilisation rates among wealthier investors
• The data also facilitates computation of approx. funds under management per retail investor
• Six companies possess a high number of retail investors with relatively high average holdings

4.0 COMPETITOR SNAPSHOTS

• Introduction
• 4.1 Abbey
• 4.2 Aberdeen Asset Management
• 4.3 AEGON Asset Management
• 4.4 Alliance Trust
• 4.5 Allianz Global Investors
• 4.6 Artemis Fund Managers
• 4.7 AXA Framlington
• 4.8 Baillie Gifford
• 4.9 Baring Fund Managers
• 4.10 BlackRock Investment Management
• 4.11 Cazenove Capital Management
• 4.12 Credit Suisse Asset Management
• 4.13 F&C Asset Management
• 4.14 Fidelity Investments
• 4.15 First State Investments
• 4.16 Franklin Templeton
• 4.17 Gartmore
• 4.18 Halifax
• 4.19 Hargreaves Lansdown
• 4.20 Henderson Global Investors
• 4.21 HSBC
• 4.22 Insight Investment
• 4.23 Invesco Perpetual
• 4.24 Investec Asset Management
• 4.25 iShares
• 4.26 JP Morgan Asset Management
• 4.27 Jupiter
• 4.28 Legal & General
• 4.29 Legg Mason
• 4.30 Lincoln Unit Trust Managers
• 4.31 Liontrust Asset Management
• 4.32 M&G
• 4.33 Marks & Spencer Financial Services
• 4.34 Marlborough Fund Managers
• 4.35 Martin Currie
• 4.36 MLC
• 4.37 Nationwide
• 4.38 Neptune Investment Management
• 4.39 New Star Asset Management
• 4.40 Newton Investment Management
• 4.41 Norwich Union
• 4.42 Old Mutual
• 4.43 Premier Asset Management
• 4.44 Prudential
• 4.45 Rathbone Unit Trust Management
• 4.46 Rensburg Fund Management
• 4.47 Resolution Asset Management
• 4.48 Royal London
• 4.49 Schroders
• 4.50 Scottish Widows
• 4.51 Skandia Investment Management
• 4.52 Smith & Williamson
• 4.53 Société Générale Asset Management
• 4.54 St James' s Place
• 4.55 Standard Life
• 4.56 The Co-operative Investments
• 4.57 Threadneedle
• 4.58 UBS Global Asset Management
• 4.59 Virgin Money
• 4.60 Witan Wealthbuilder

GRAPHICS / TABLES

• Retail investor breakdown by age group, household income band and geographical location
• Retail investor breakdown by number of children aged under 25 and employment status
• Segmentation of retail investors by value of funds committed to security-based investments
• % of all cons. class. as actual or pot. retail invs. seg. by age group / value of assets inv., 2007 (data)
• % of all cons. class. as actual or pot. retail invs. seg. by household income / value of assets inv., 2007 (data)
• % of all cons. class. as actual or pot. retail invs. seg. by geographical location / value of assets inv., 2007 (data)
• % of all cons. class. as actual or pot. retail invs. seg. by no. of children under 25 / value of assets inv., 2007 (data)
• % of all cons. class. as actual or pot. retail invs. seg. by employment status / value of assets inv., 2007 (data)
• % penetration rate among retail investors by type of security-based investment, 2007
• % penetration rate among retail investors by type of security-based investment, 2005-7 (data)
• % intention to purchase among retail investors by type of security-based investment, 2008
• % intention to purchase among retail investors by type of security-based investment, 2006-8 (data)
• % penetration rate among retail investors by primary underlying inst. in which funds are invested, 2005-7 (data)
• % intention to purchase among retail invs. by primary underlying inst. in which funds are invested, 2006-8 (data)
• % penetration rate among retail investors by specific geography in which funds are invested, 2005-7 (data)
• % intention to purchase among retail investors by specific geography in which funds are invested, 2006-8 (data)
• % penetration rate among retail investors by specific business sector in which funds are invested, 2005-7 (data)
• % intention to purchase among retail invs. by specific business sector in which funds are invested, 2006-8 (data)
• % penetration rate among retail investors by style of investment, 2005-7 (data)
• % intention to purchase among retail investors by style of investment, 2006-8 (data)
• Risk appetite of retail investors in the UK when it comes to making security-based investments, 2007
• Risk appetite of retail investors in the UK when it comes to making security-based investments, 2007 (data)
• Buying and selling frequency of retail invs. in the UK when it comes to making security-based investments, 2007
• Buying and selling frequency of retail invs. in the UK when it comes to making sec.-based invests., 2007 (data)
• General approach of retail investors with regards to self-direction and financial advice, 2007
• General approach of retail investors with regards to self-direction and financial advice, 2005-7 (data)
• Distribution interfaces used by retail investors for making security-based investments, 2007
• Distribution interfaces used by retail investors for making security-based investments, 2005-7 (data)
• Distribution channels used by retail investors for making security-based investments, 2007
• Distribution channels used by retail investors for making security-based investments, 2005-7 (data)
• Distribution interfaces forecast to be used by retail investors for making security-based investments, 2008
• Distribution interfaces forecast to be used by retail invs. for making security-based investments, 2006-8 (data)
• Distribution channels forecast to be used by retail investors for making security-based investments, 2008
• Distribution channels intended to be used by retail invs. for making security-based investments, 2006-8 (data)
• Key factors determining choice of investment manager by retail investors, 2007
• Key factors determining choice of investment manager by retail investors, 2007 (data)
• Retail investor awareness and usage of 20 leading fund supermarkets and discount brokers, 2007
• Retail investor awareness and usage of 20 leading fund supermarkets and discount brokers, 2007 (data)
• Retail investor awareness, trust and usage of Abbey in the context of security-based investments
• Retail inv. awareness, trust and usage of Aberdeen Asset Management in the context of sec.-based invests
• Retail inv. awareness, trust and usage of AEGON Asset Management in the context of sec.-based invests
• Retail investor awareness, trust and usage of Alliance Trust in the context of security-based investments
• Retail inv. awareness, trust and usage of Allianz Global Investors in the context of security-based investments
• Retail inv. awareness, trust and usage of Artemis Fund Managers in the context of security-based investments
• Retail investor awareness, trust and usage of AXA Framlington in the context of security-based investments
• Retail investor awareness, trust and usage of Baillie Gifford in the context of security-based investments
• Retail inv. awareness, trust and usage of Baring Fund Managers in the context of security-based investments
• Retail inv. aware., trust and usage of BlackRock Investment Management in the context of sec.-based invests
• Retail inv. awareness, trust and usage of Cazenove Capital Management in the context of sec.-based invests
• Retail inv. aware., trust and usage of Credit Suisse Asset Management in the context of sec.-based invests
• Retail inv. awareness, trust and usage of F&C Asset Management in the context of sec.-based investments
• Retail investor awareness, trust and usage of Fidelity Investments in the context of security-based investments
• Retail inv. awareness, trust and usage of First State Investments in the context of security-based investments
• Retail investor awareness, trust and usage of Franklin Templeton in the context of security-based investments
• Retail investor awareness, trust and usage of Gartmore in the context of security-based investments
• Retail investor awareness, trust and usage of Halifax in the context of security-based investments
• Retail inv. awareness, trust and usage of Hargreaves Lansdown in the context of security-based investments
• Retail inv. awareness, trust and usage of Henderson Global Investors in the context of sec.-based investments
• Retail investor awareness, trust and usage of HSBC in the context of security-based investments
• Retail investor awareness, trust and usage of Insight Investment in the context of security-based investments
• Retail investor awareness, trust and usage of Invesco Perpetual in the context of security-based investments
• Retail inv. awareness, trust and usage of Investec Asset Management in the context of sec.-based investments
• Retail investor awareness, trust and usage of iShares in the context of security-based investments
• Retail inv. awareness, trust and usage of JP Morgan Asset Management in the context of sec.-based invests
• Retail investor awareness, trust and usage of Jupiter in the context of security-based investments
• Retail investor awareness, trust and usage of Legal & General in the context of security-based investments
• Retail investor awareness, trust and usage of Legg Mason in the context of security-based investments
• Retail inv. awareness, trust and usage of Lincoln Unit Trust Managers in the context of sec.-based investments
• Retail inv. awareness, trust and usage of Liontrust Asset Management in the context of sec.-based invests
• Retail investor awareness, trust and usage of M&G in the context of security-based investments
• Retail inv. aware., trust and usage of Marks & Spencer Financial Services in the context of sec.-based invs
• Retail inv. awareness, trust and usage of Marlborough Fund Managers in the context of sec.-based invests
• Retail investor awareness, trust and usage of Martin Currie in the context of security-based investments
• Retail investor awareness, trust and usage of MLC in the context of security-based investments
• Retail investor awareness, trust and usage of Nationwide in the context of security-based investments
• Retail inv. aware., trust and usage of Neptune Investment Management in the context of sec.-based invests
• Retail inv. awareness, trust and usage of New Star Asset Management in the context of sec.-based invests
• Retail inv. aware., trust and usage of Newton Investment Management in the context of sec.-based invests
• Retail investor awareness, trust and usage of Norwich Union in the context of security-based investments
• Retail investor awareness, trust and usage of Old Mutual in the context of security-based investments
• Retail inv. awareness, trust and usage of Premier Asset Management in the context of sec.-based investments
• Retail investor awareness, trust and usage of Prudential in the context of security-based investments
• Retail inv. aware. trust and usage of Rathbone Unit Trust Management in the context of sec.-based invests
• Retail inv. awareness, trust and usage of Rensburg Fund Management in the context of sec.-based invests
• Retail inv. awareness, trust and usage of Resolution Asset Management in the context of sec.-based invests
• Retail investor awareness, trust and usage of Royal London in the context of security-based investments
• Retail investor awareness, trust and usage of Schroders in the context of security-based investments
• Retail investor awareness, trust and usage of Scottish Widows in the context of security-based investments
• Retail inv. aware., trust and usage of Skandia Investment Management in the context of sec.-based invests
• Retail investor awareness, trust and usage of Smith & Williamson in the context of security-based investments
• Retail inv. aware., trust and usage of Société Générale Asset Management in context of sec.-based invests
• Retail investor awareness, trust and usage of St James' s Place in the context of security-based investments
• Retail investor awareness, trust and usage of Standard Life in the context of security-based investments
• Retail inv. awareness, trust and usage of The Co-operative Investments in the context of sec.-based invests
• Retail investor awareness, trust and usage of Threadneedle in the context of security-based investments
• Retail inv. awareness, trust and usage of UBS Global Asset Management in the context of sec.-based invests
• Retail investor awareness, trust and usage of Virgin Money in the context of security-based investments
• Retail investor awareness, trust and usage of Witan Wealthbuilder in the context of security-based investments