Table of Contents
Executive Summary
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- The market
- Around 10 million parents are saving for their children
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- Figure 1: Estimated number of parents who are saving on behalf of their children, February 2016
- CTFs are still the most widely-held children’s savings product
- Strong growth in Junior ISA subscriptions and balances
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- Figure 2: Number of Junior ISAs subscribed, by component, 2011/12-2014/15
- Lone parents account for around a quarter of the family market
- Parent’s own financial situation will affect their ability to save
- Not much of a choice: Low returns on cash or a volatile stock market
- Companies and brands
- The children’s savings market is dominated by banks and building societies…
- …while children’s investment products are mostly provided by investment companies and friendly societies
- Banks and building societies still tend to favour in-branch applications
- The consumer
- Parents and grandparents are the main savers for children
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- Figure 3: Proportion of parents with others saving for their children, February 2016
- A large minority of parents are not saving on behalf of their children
- Despite prevailing low savings rates, parents tend to favour cash over equity investment
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- Figure 4: Products used by parents to save for their children (ranked in order of popularity), February 2016
- In choosing where to save, around one in four parents was swayed by a recommendation
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- Figure 5: Factors influencing choice of product (ranked in order of significance), February 2016
- Many parents draw on multiple sources to save for their children
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- Figure 6: Sources of money put towards children’s savings (ranked in order of significance), February 2016
- 55% of parents are keen for their children to get into a good saving habit
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- Figure 7: Agreement with statements about general attitudes and behaviours related to saving for children (ranked in order of significance), February 2016
- Expected activity by parent-savers over the coming year
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- Figure 8: Agreement with statements about saving intentions and switching experience (ranked in order of significance), February 2016
- What we think
Issues and Insights
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- Capturing parents early is key to success
- The facts
- The implications
- Reach non-product holders and busy parents through ‘save the change’ initiatives
- The facts
- The implications
- More needs to be done to jolt parents out of their apathy towards saving and investment returns
- The facts
- The implications
The Market – What You Need to Know
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- Around 10 million parents are saving for their children
- Cash-based accounts are the preferred home for children’s savings
- Junior ISAs grow in popularity, while NS&I Children’s Bonds fall out of favour
- There are nearly 8 million households with dependent children in the UK
- Growth in child population forecast
- Not much of a choice: Low returns on cash or a volatile stock market
Market Size
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- Size of the adult population saving for children
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- Figure 9: Proportion of parents who are saving for their children, February 2016
- Products used by parents to save for children
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- Figure 10: Proportion of parents who own various saving and investment products for the purposes of saving for children, February 2016
- A note about Mintel’s estimates
Market Segmentation
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- Children’s cash savings market estimated to be worth upwards of £8 billion
- The past decade has seen a fall in the number subscribing to NS&I’s Children Bonds
- Steady flow of CTF money into Junior ISAs
- Strong growth in Junior ISA subscriptions
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- Figure 11: Number of Junior ISAs, amounts subscribed and average subscription, 2011/12-2014/15
The Family Environment
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- There are nearly 8 million households with dependent children in the UK
- Changing social trends have altered the family landscape
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- Figure 12: UK households and family types, 1996, 2001, 2005 and 2015
- Trend towards having fewer children is being maintained
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- Figure 13: Percentage of families with dependent children: by number of dependent children in the family, 2005 and 2015
Market Drivers
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- Child population set to grow over the next five years
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- Figure 14: Projected size of UK child population, 2015, 2020, 2025 and 2030
- Only 17% of households with children would describe their financial situation as “healthy”
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- Figure 15: Current financial situation – Parents versus non-parents, February 2016
- Parents are less confident about their financial prospects
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- Figure 16: Confidence in financial situation over the coming year – Parents versus non-parents, February 2016
- Motivational drivers behind saving for children
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- Figure 17: Reasons for saving for children, October 2011, December 2012 and February 2015
The Saving and Investment Environment
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- Key factors
- Low returns on cash provide a disincentive to save…
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- Figure 18: Average monthly quoted cash deposit and ISA interest rates, January 2008-January 2016
- …while stockmarket volatility may also be deterring potential investors
Companies and Brands – What You Need to Know
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- The top five banking groups and the largest building society control 60-70% of the children’s savings market
- The investment sector is less concentrated
- Scope to develop online channel in the children’s savings market
- Halifax invests in TV advertising to reinforce its brand in the children’s savings market
Competitive Strategies
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- Market composition
- Various provider types
- Children’s cash savings – A stable market with low switching levels
- Children’s investments – A fairly fragmented market
- Customer acquisition strategies
- Limited use of bonus and loyalty rates
- Many children’s accounts can still only be opened via traditional channels, such as the branch
- Technology-driven innovation
- New app teaches children how to save money
Advertising and Marketing Activity
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- Limited above-the-line adspend
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- Figure 19: Total above-the line, online display and direct mail advertising expenditure on savings products and selected investment products, 2011-15
- Halifax was the dominant advertiser in 2015
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- Figure 20: Total above-the line, online display and direct mail advertising expenditure on identified children’s savings products, 2011-2015
- Providers make use of online and digital media to reach target audience
- Nielsen Media Research coverage
The Consumer – What You Need to Know
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- Market penetration
- Parents tend to favour cash over equity investment
- A personal recommendation can be very persuasive
- Many parents draw on more than one source to save for their children
- Many parents want to their children to get into a good saving habit
- Expected activity by parent-savers over the coming year
Who Saves for Children
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- 40% of parents are saving regularly for their children…
- …but around the same proportion are not saving at all
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- Figure 21: Proportion of adults with children and whether or not they are saving on their behalf, February 2016
- The propensity to save on a regular basis decreases as children age and the cost of parenthood rises
- Grandparents are significant contributors to the children’s savings market
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- Figure 22: Others saving for own children, February 2016
- 16% of non-saving parents say others are saving for their children
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- Figure 23: Others saving for own children, by whether or not parents are saving and how frequently February 2016
Products Used to Save for Children
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- Low take-up of Junior investment ISAs
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- Figure 24: Products used by parents to save for their children (ranked in order of popularity), February 2016
- Regular savings accounts are a popular choice with parents
- Parents who save regularly are more likely to have a Child Trust Fund
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- Figure 25: Products used by parents to save for their children, by frequency of saving, February 2016
Factors Influencing Choice of Product
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- Around a quarter of parents made their product selection based on a recommendation
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- Figure 26: Factors influencing choice of product (ranked in order of significance), by type of product, February 2016
- Just 15% of parents who are investing for children say their choice of product was determined by an adviser’s recommendation
- Social media is not currently an influential channel in the children’s savings market, but it has the potential to be
- Just over a third of parents who chose an investment product were existing customers of the provider
- Having access to a local branch can also influence choice
Sources of Money Saved or Invested for Children
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- Many parents draw on more than one source to save for their children
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- Figure 27: Sources of money put towards children’s savings (ranked in order of significance), February 2016
- Parents with older children are more likely to use their earnings
- 15% of parents are saving some or all of their child benefit
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- Figure 28: Sources of money put towards children’s savings (ranked in order of significance), by frequency of saving, February 2016
Parent Attitudes and Behaviours Regarding Saving for Children
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- 55% of parent-savers want to encourage their children to get into a good saving habit
- Just 35% of parent-savers say that saving for their children is a financial priority
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- Figure 29: Agreement with statements about general attitudes and behaviours related to saving for children (ranked in order of significance), February 2016
- 24% like to have easy access to their child’s savings
- Most parents fail to monitor the return they receive on their child’s savings
- Only 6% of parent-savers want to know about children’s saving and investment products
Parent Saving Intentions and Switching Experience
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- A fifth of parents saving for children plan to increase the amount they are putting away
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- Figure 30: Agreement with statements about saving intentions and switching experience (ranked in order of significance), February 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- More about CTFs and Junior ISAs
- Tax on savings
- Changes to the way savings are taxed from 6 April 2016
- £100 cap on parent contributions still applies
- Abbreviations
- Consumer research methodology
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