Table of Contents
Executive Summary
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- Economic background
- Strong economic growth throughout 2014
- Low levels of unemployment but slow wage growth
- Saving and investing environment
- Interest rates remain at historic low levels
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- Figure 1: Rate of change for consumer deposits, January 2008-October 2014
- 2014 FTSE 100 close did not match that of 2013
- Below target inflation easing pressure on consumers
- Consumer confidence
- Consumer confidence falls after post-recession high
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- Figure 2: Financial confidence index, 2009-14
- Higher earners are also feeling the squeeze
- Major concerns about consumers’ long-term financial security
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- Figure 3: Consumer confidence in their future financial wellbeing, October 2014
- The consumer
- Value of savings and investments
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- Figure 4: Value of savings and investments, October 2014 and November 2013
- Saving and investment portfolio
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- Figure 5: Saving and investment product ownership, November 2013
- Most people are saving for precautionary reasons
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- Figure 6: Reasons for saving, October 2014
- Some say that they cannot afford to save at the moment
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- Figure 7: Attitudes towards saving and investing, October 2014
- Attitudes towards savings products and providers
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- Figure 8: Attitudes towards savings products and providers
- Some 65% feel that they “cannot afford to take risks with my savings”
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- Figure 9: Attitudes towards investing, October 2014
- What we think
Issues and Insights
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- Cultivating the long-term savings habit
- The facts
- The implications
- Low interest rates matter, but there are other influencers
- The facts
- The implications
- The disconnect between enthusiasm for investing and appetite for risk
- The facts
- The implications
Trend Application
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- Without a care
- Guiding Choice
- Mintel Futures: Old Gold
Economic Background
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- Key points
- Economic growth continues apace
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- Figure 10: UK quarterly changes in GDP, Q1 2006-Q3 2014
- Figure 11: Quarterly values of GDP (£bn), Q1 2004-Q3 2014
- The savings ratio has fallen as the recovery has gathered pace
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- Figure 12: Quarterly variations in savings ratio, Q1 2004-Q2 2014
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- Figure 13: 12 month percentage change for house prices, October 2004-October 2014
- Unemployment falls to lowest level in six years
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- Figure 14: Average unemployment rate, 2004-2014
Saving and Investing Environment
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- Key points
- Savers continue to lose out to low interest rates
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- Figure 15: Effective household interest rates for various savings products, January 2011-October 2014
- Falling energy prices putting pressure on the FTSE 100
- Below target inflation limits the scope for the BoE to raise rates
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- Figure 16: Consumer Price Index values, 12 month inflation rates, January 2007-October 2014
Retail Savings and Investment Overview
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- Key points
- Slow growth in retail savings balances
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- Figure 17: Rate of change for consumer deposits and consumer personal loans and overdrafts, January 2008-October 2014
- Growth in ISA subscriptions predominantly driven by stocks and shares
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- Figure 18: Volume and value of ISA subscriptions, by type of ISA, 2009/09-2013/14
- Net and gross investment fund sales
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- Figure 19: Retail sales of unit trusts and OEICs – UK domiciled, 2008-13
Consumer Confidence
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- Key points
- Decrease in confidence in short-term financial wellbeing
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- Figure 20: Financial confidence index, 2009-14
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- Figure 21: Consumer sentiment about financial situation for next 12 months, December 2013 vs December 2014
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- Figure 22: Financial situation compared to 12 months ago, December 2013 vs. December 2014
- Considerable difference in outlook for high earners
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- Figure 23: Consumer sentiment about financial situation for next 12 months, by annual income, December 2014
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- Figure 24: Proportion of consumers confident that they will be OK over the next 12 months, by income, March 2014-December 2014
- Only 6% feel “very secure” about their long-term financial security
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- Figure 25: Consumers’ confidence in their future financial well-being
- The cost of retirement weighs heavily on people’s long-term sense of security
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- Figure 26: Confidence in future financial wellbeing by gross annual household income, October 2014
Value of Savings and Investments
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- Key points
- Saving is a widespread practice
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- Figure 27: Value of savings and investments, October 2014
- Slight increase in value of savings
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- Figure 28: Values of saving and Investment, November 2013 and October 2014
- Some 22% of higher earners have at least £100,000 in savings and investments
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- Figure 29: Value of savings by household income, October 2014
Type of Saving and Investment Products Owned
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- Key points
- Simplicity rules
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- Figure 30: Penetration of savings and investments products, October 2014
- The investment opportunity
- Peer-to-peer lending, or peer-to-peer guidance?
- Older consumers with greater amounts of savings are more likely to invest
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- Figure 31: Age profile of savers and investors, October 2014
- Consumers are ill-prepared for the long-term future
Motivation for Saving
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- Key points
- Protection from the unexpected is the main motivation for saving
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- Figure 32: Consumer motivations for saving, October 2014
- Reliance on the state
- Retirement is a process, not an event
- “Long-term” planning only covers one generation
- Shifting priorities
- Half of under-25s are saving for education costs
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- Figure 33: Reasons to save by age, October 2014
- Motivation matters
Long-term Financial Confidence
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- Key points
- Changing responsibilities lead to changes in confidence
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- Figure 34: Consumer assessment of future financial well-being by age, October 2014
- The influence of product ownership on confidence
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- Figure 35: Consumers’ rating of long-term financial security by ownership of savings and investment products, October 2014
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- Figure 36: Ownership of equity type investment products by confidence in future financial wellbeing, October 2014
- The property wealth effect
- The influence of value of savings and investments on confidence
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- Figure 37: Consumer assessment of future financial well-being by value of savings, October 2014
- Planning for retirement
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- Figure 38: Ownership of savings and investment products by age, October 2014
Attitude towards saving and investing
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- Key points
- Saving for peace of mind
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- Figure 39: Consumer attitude towards saving, October 2014
- Affordability is the biggest barrier to saving
- Saving is more ad-hoc than habitual for many consumers
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- Figure 40: Attitude towards savings and investing by trends in adding to savings and spending extra money, October 2014
- Figure 41: Attitude towards saving and investing by current financial situation and confidence in financial situation over the next 12 months, October 2014
- Variations in savings habits highlight the need for specifically targeted products
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- Figure 42: Attitude towards saving by gender and age, October 2014
- The vital role of the housing market
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- Figure 43: Attitude towards saving and investing by current housing situation, October 2014
Attitudes towards Savings Products and Providers
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- Key points
- For many consumers, instant access is essential
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- Figure 44: Consumer attitude towards saving products and providers
- Consumers split over interest rates
- Too many complicated products prevent consumers from getting the best deal
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- Figure 45: Attitudes towards saving, by agreement with other attitudinal statements about saving, October 2014
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- Figure 46: Agreement with various statements about savings by value of savings/investments, October 2014
- The role of the web
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- Figure 47: Agreement/disagreement with the statement “purchasing savings products is complicated” by age, October 2014
Consumers and Investing
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- Key points
- Overwhelming majority of consumers believe investments should be made easier
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- Figure 48: Consumers attitude towards investing, October 2014
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- Figure 49: Agreement with the statement “Making investments should be made easier” by annual household income and use of extra money, October 2014
- Investing is not perceived to be worth the risk
- The mental scars of the financial crisis are still evident
- Confident investors make for confident consumers
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- Figure 50: Security in future financial wellbeing, by agreement with attitudes towards investing, October 2014
- Lack of alignment between interest in investment and appetite for risk
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- Figure 51: Agreement with various statements about investments by age, October 2014
Women, Saving and Investing
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- Key points
- Women are less likely to have savings and/or investments and for these to be of a high value
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- Figure 52: Value of savings/investments by gender, October 2014
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- Figure 53: Key financial indicators by gender, October 2014
- Savings and investment products perceived to be too complex among women
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- Figure 54: Ownership profile of savings and investment products, by gender October 2014
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- Figure 55: Agreement with various attitudes about investment by Gender, October 2014
- More reason to link life goals to saving and investment
- The need for a confidence boost
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- Figure 56: Attitude towards saving and investing by gender, October 2014
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