Long-term Savings and Investments - UK - February 2008

Table of Contents

• Issues in the Market
• Product definitions
• Abbreviations
• Market in Brief
• The key findings of Mintel' s consumer research -- financial priorities
• Product ownership and wealth
• Attitudes to risk
• Investor behaviour
• Popular advice sources
• Northern Rock reaction
• Investment bonds more popular than unit trusts or OEICs
• 2004-07 saw increased investment in all the main asset classes
• Storm clouds gather
• Market leaders
• Promotional activity
• Distribution trends
• Economic and Investment Climate
• Key points
• An economic overview
• Slower growth forecast for the domestic economy
  • Figure 1: GDP annual growth and proportion of workforce unemployed -- UK, 1999-2008
• Walking a tight rope: the art of controlling inflation
  • Figure 2: Average annual changes in the bank base rate, CPI and RPI -- UK, 1999-2007
• Increased stockmarket volatility
  • Figure 3: FTSE 100 and FTSE All Share -- daily index movements, January 2000-January 2008
• Is the bear back?
• Markets in turmoil
• Looking for a silver lining
• Consumer sentiment in the doldrums
  • Figure 4: Changes in headline consumer confidence -- Monthly and 12-month rolling average, January 2001-December 2007
• Consumers cut back on spending...
  • Figure 5: Intentions to save and spend in the next 12 months, January 2001-January 2008
• ...and put greater onus on saving
  • Figure 6: Total PDI, consumer expenditure and savings, 2003-12
• The Consumer -- Financial Priorities in 2008
• Key points
• About Mintel' s consumer survey
• ' Making ends meet' is most people' s main financial concern
  • Figure 7: Financial priorities over the next 12 months, by order of significance, January 2008
• Men and women are driven by different savings goals
  • Figure 8: Financial priorities over the next 12 months, by gender and age group, January 2008
• AB and C2 Internet users are most likely to save
  • Figure 9: Financial priorities over the next 12 months, by socio-economic group and presence of children, January 2008
• Regional variation
  • Figure 10: Financial priorities over the next 12 months, by region, January 2008
• More than two fifths of renters say debt repayment is a financial priority
  • Figure 11: Financial priorities over the next 12 months, by gross annual household income and tenure, January 2008
• Strong link between long-term savings products and protection products
  • Figure 12: Financial priorities over the next 12 months, by selected financial products, January 2008
• The Consumer -- Asset Ownership
• Key points
• Household sector was worth nearly £7 billion in 2006
  • Figure 13: Net worth of the household sector, 2001-06
• Cash favoured over equities
  • Figure 14: Ownership of savings and investment products, January 2008
• Buy-to-let investors are particularly keen on diversifying...
  • Figure 15: Cross analysis of ownership, by type of savings/investment product, January 2008
• ...and saving for retirement
  • Figure 16: Financial priorities over the next 12 months, by type of savings and investment products owned, January 2008
• Asset ownership is greater among men than women
  • Figure 17: Ownership of savings and investment products, by gender, age, socio-economic group, working status, tenure and household income, January 2008
• Broadsheets and mid-market tabloids offer ad opportunities
  • Figure 18: Ownership of savings and investment products, by newspaper readership, Internet usage, TV reception, mobile phone provider and supermarket regularly visited, January 2008
• One in seven Internet users have five or more product types
  • Figure 19: Number of savings and investment product types owned, January 2008
  • Figure 20: Ownership of savings and investment products, by number of types owned, January 2008
• Among those with savings, a third have over £10,000
  • Figure 21: Value of investible assets, by number of product types owned, January 2008
• Wealth increases with age
  • Figure 22: Value of investible assets, by gender and age group, January 2008
• Long-term savings goals are more prevalent among the rich
  • Figure 23: Financial priorities over the next 12 months, by amount of investible assets, January 2008
• Market Size -- An Overview
• Key points
• Regulated retail investment sales
  • Figure 24: Number of new regulated retail investment product sales, by sector, April 2005-March 2007
• Investment bonds accounted for nearly three fifths of investment sales
  • Figure 25: Number of new regulated investment sales, by product type, April 2005-March 2007
• Sector Performance
• Key points
• Amounts invested in NS&I boosted by ' flight to quality'
  • Figure 26: Total amounts invested in NS&I products, 2001-07
• Gilts benefit from a doveish stance on interest rates
  • Figure 27: Size of the gilts market (nominal amounts outstanding), 2000-07
• UK corporate bonds fall out of favour
  • Figure 28: Total assets held in UK corporate bond sector and all bond sector, 2000-07
• Demand for investment bonds picks up
  • Figure 29: Total number of new single-premium investment bond contacts and value of new premiums, 2000-07
• Unit-linked bonds have fared well over the 2003-07 period
  • Figure 30: Proportional distribution of investment bond sales by main product type, based on new premiums, 2001, 2004 and 2007
• Typical purchasers are retirees and higher rate taxpayers
• Proposed tax changes threaten their appeal
• Offshore may be off the menu
• Healthy demand for unit trusts and OEICs
  • Figure 31: Retail sales of unit trusts and OEICs -- UK domiciled, 2000-07
• Property funds -- a recent success story...
• ...although their performance is now on the slide
• The arrival of REITs
• Investors plough more into stocks and shares ISAs
  • Figure 32: New ISA business, by asset class, 2000/01-2006/07
• The value of funds held in ISAs grew by 15% in 2007
  • Figure 33: Value of funds held in each of the three ISA components, 2002-07
• Around 13% of UK equity is owned by private individuals
  • Figure 34: Value of ordinary shares owned by individuals, 2000-06
• The Consumer -- Understanding Risk
• Key points
• Investment risk
  • Figure 35: Risk profile of selected savings and investments
• Past mistakes undermine confidence
• Education, education, education
• Adventurous men, cautious women
  • Figure 36: Attitudes towards saving and investing, by gender, January 2008
• Segmenting savers into five typology groups
  • Figure 37: Savings clusters, January 2008
  • Figure 38: Attitudes towards saving and investing, by cluster, January 2008
• Confident Investors
• Cautious Savers
• Risk-averse
• Disinterested
• The Disinterested are more focused on ' making ends meet' than saving
  • Figure 39: Financial priorities over the next 12 months, by type of savings and investment products owned, January 2008
• Confident Investors have the most diversified portfolios...
  • Figure 40: Ownership of savings and investment products, by cluster, January 2008
• ...and have the greatest wealth
  • Figure 41: Value of investible assets, by cluster, January 2008
• The Consumer -- Reaction to Northern Rock
• Key points
• How the crisis unfolded
• Uncertain future
• The fallout
• More than half of savers say that they' ll think more carefully about where to save or invest in future
  • Figure 42: Agreement with statements relating to Northern Rock, by gender, January 2008
• The under-35s have been most affected by the crisis
  • Figure 43: Agreement with statements relating to Northern Rock, by age group, January 2008
• Over a third of bond and shareholders have reviewed their portfolios since the crisis
  • Figure 44: Agreement with statements relating to Northern Rock, by product type owned, January 2008
• Northern Rock' s savings customers tend to be on the wealthier end of the spectrum
  • Figure 45: Agreement with statements relating to Northern Rock, by amount of investible assets, January 2008
• Clusters conform to type
  • Figure 46: Agreement with statements relating to Northern Rock, by savings cluster, January 2008
• Largest Investment Bond Providers
• Key points
• Halifax Life retains its leader position in the single-premium life sector
  • Figure 47: New premium income from single-premium life policies, by selected providers, 2004-06
• Largest Fund Managers
• Key points
• Invesco Perpetual is the largest unit trust/OEIC fund manager...
  • Figure 48: Top 20 unit trust and OEIC fund managers, by retail & private client funds under management, December 2007
• ...while Halifax claims top spot in the ISA fund sector
  • Figure 49: Top ten ISA fund managers, by funds under management, December 2007
• Brand Communication and Advertising
• Key points
• Adspend on savings and investment products up slightly in 2006/07
  • Figure 50: Total advertising expenditure on savings and investment products, by product category, 2002/3-06/07
• ING Direct continues to be the highest-spending advertiser
  • Figure 51: Top 20 advertisers of savings and investment products, 2004/5-06/07
• TV advertising is suitable for simple savings accounts, while the trade press is relied upon to promote more complex products
  • Figure 52: Proportional distribution of adspend on savings and investment products, by media type, 2005/06 and 2006/07
• Selling Channels
• Key points
• Intermediaries reign supreme in the investment market
  • Figure 53: Number of new regulated investment sales, by product type and selling channel, April 2005-March 2007
• IFAs are responsible for the lion' s share of investment bond sales
  • Figure 54: Investment bond distribution mix based on new premiums, 2003-05
• Unit trusts and OEICs: the main routes to market
• Intermediaries generate the lion' s share of unit trusts and OEIC sales...
  • Figure 55: Gross retail sales of unit trust and OEICs, by distribution channel, 2003-06
• ...while fund supermarkets are stealing a march in the ISA fund market
  • Figure 56: Gross retail sales of ISA funds, by distribution channel, 2003-06
• The ascent of the fund supermarkets
• The Consumer -- Sources Used for Advice
• Key points
• Most savers rely on bank staff to give them investment advice
  • Figure 57: Sources of savings and investment advice used in the past and most likely to use in the future, January 2008
• Reliance on different advice sources alters with age
  • Figure 58: Sources of financial advice used in the past, by gender and age group, January 2008
• Buy-to-let investors are more likely to use a wealth management company or private bank
  • Figure 59: Sources of financial advice used in the past, by product type owned, January 2008
• The greater the wealth, the greater the need for expert advice
  • Figure 60: Sources of financial advice used in the past, by amount of investible assets, January 2008
• Cautious Savers tend to rely on bank and building society staff, while Confident Investors are prone to using an IFA
  • Figure 61: Sources of financial advice used in the past, by savings cluster, January 2008
• The Consumer -- Experiences of Saving and Investing
• Key points
• Savvy savers?
  • Figure 62: Agreement with statements about saving and investing, January 2008
• Knowledge comes with age...
  • Figure 63: Agreement with statements about saving and investing, by gender and age group, January 2008
• ...and experience
  • Figure 64: Agreement with statements about saving and investing, by product type owned, January 2008
• The better off are the most independent
  • Figure 65: Agreement with statements about saving and investing, by amount of investible assets, January 2008
• Confident Investors and Cautious Savers are more prone to taking expert advice
  • Figure 66: Agreement with statements about saving and investing, by savings cluster, January 2008
• Further analysis
• Appendix -- Profile of Savings Clusters (Part 1)
  • Figure 67: Profile of savings clusters, by gender, age, socio-economic group, working status, tenure and household income, January 2008
• Appendix -- Profile of Savings Clusters (Part 2)
  • Figure 68: Profile of savings clusters, by newspaper readership, Internet usage, TV reception, mobile phone provider and supermarket regularly visited, January 2008