Table of Contents
Executive Summary
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- The market
- A large target market, comprising 13.5 million parents…
- …of which, 6 million parents are saving or investing on a regular basis for their offspring
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- Figure 1: Estimated number of parents with children aged 0-17 who are saving or investing for their children, April 2020
- Junior ISA penetration is low compared to its forerunner, the CTF…
- …with take-up not helped by a sustained period of low interest rates
- Impact of COVID-19 on the market for children’s saving and investment products
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- Figure 2: Expected impact of COVID-19 on saving and investing for children, short, medium and long-term, 28 May 2020
- Companies and brands
- A diverse market, populated by various provider types
- Product development mainly driven by digital innovation
- Junior Stocks & Shares ISA market continues to attract new entrants
- The consumer
- Almost half of parents are regularly saving for their children
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- Figure 3: Other family members or friends who are saving for children, April 2020
- Just over a fifth of parents say their child has an investment product
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- Figure 4: Ownership of children’s savings and investment products, April 2020
- Parents want to decide when their child gets access to their savings
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- Figure 5: Parent aspirations and interests in regards to their children’s savings/investments, April 2020
- Three fifths are planning to contribute more over the coming year
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- Figure 6: Parents who are planning to increase their children’s savings over the coming year, by saving frequency, April 2020
- Two thirds of parents are keeping their children’s savings a secret
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- Figure 7: Activities or strategies used to teach children the value of money, April 2020
- 45% of parents expect their children to use CTF money to fund education
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- Figure 8: What parents expect their children will do with their CTF at maturity, April 2020
- What we think
Impact of COVID-19 on Saving and Investing for Children
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- Short, medium and long-term impact on the industry
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- Figure 9: Expected impact of COVID-19 on saving and investing for children, short, medium and long-term, 28 May 2020
- Short term
- Medium term
- Long term
- Opportunities and threats
- Base rate cut leads to paltry saving rates
- Distribution challenges could limit growth and increase interest in online savings providers
- Falling share prices will spook some potential investors…
- ...but will lure others
- Ethical saving and investing options to gain more focus
- COVID-19 could boost financial support from grandparents
- Impact on the market
- Retail deposits will increase…
- …but children’s savings are unlikely to be the focus for increased saving
- More limited withdrawal activity
- Shifts in consumer behaviour
- More parents are struggling financially compared to a year ago
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- Figure 10: Current financial situation – parents versus non-parents, March 2019 and April 2020
- Parents are less confident about their financial prospects
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- Figure 11: Financial prospects over the coming year – parents versus non-parents, March 2019 and April 2020
- 42% of parents are worse off as a result of COVID-19
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- Figure 12: Impact of COVID-19 on financial situation, 21 May 2020
- Parents are already seeing impact of COVID-19 on incomes and savings
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- Figure 13: Impact of COVID-19 on household income and value of savings and investments – total sample versus parents only, 21 May 2020 (week 10 of lockdown)
- A third of parents have seen their outgoings fall
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- Figure 14: Changes to personal circumstances caused as a result of COVID-19 – total sample versus parents only, 21 May 2020 (week 10 of lockdown)
- Impact on key consumer segments
- Higher-income households are well-placed to ride out the storm
- Parents in lower-income groups will find it harder to start the savings habit
- How a COVID-19 recession will reshape the market
- Caution creates a saving mentality
- Children’s investment market is unlikely to see a flight to cash
- Access and added benefits will become more important
- What can we learn from previous recessions?
- Any uplift in savings is likely to be temporary
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- Figure 15: Household savings ratio, Q1 2006-Q4 2019
- COVID-19: Market context
Issues and Insights
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- Adult ISAs will benefit from an inflow of funds from CTFs reaching maturity
- The facts
- The implications
- Providers need to address parent concerns about control and access
- The facts
- The implications
The Market – What You Need to Know
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- The market for children’s savings and investments is large…
- …and has grown steadily over the past two decades
- 6 million parents are saving regularly for their offspring
- There are around 1 million Junior ISAs compared to over 6 million CTFs
- Junior ISA market has seen a sustained period of low interest rates
Size of the Children’s Savings Market
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- Less than half of all parents are saving regularly for their children
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- Figure 16: Proportion of parents who are saving or investing for their children or know of other adults who are saving or investing on behalf of their children, April 2020
- Plans by some parents to start saving might need to be put on hold
- Many grandparents are saving or investing on behalf on grandchildren
Key Products: CTFs and Junior ISAs
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- There are over 6 million CTFs…
- …the first of which mature in September 2020
- There are around 1 million Junior ISAs
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- Figure 17: Number of Junior ISAs, by component, 2011/12-2018/19
- Around two fifths of Junior ISA subscriptions are invested in stocks and shares each year
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- Figure 18: Amounts subscribed in Junior ISAs, by component, 2011/12-2018/19
- Low rates are a barrier for Junior Cash ISAs
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- Figure 19: Average subscription, by component, 2011/12-2018/19
- Market value of Junior ISA funds
Market Drivers
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- There are 8 million households with dependent children in the UK
- Families with two children are the most common
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- Figure 20: Percentage of families with dependent children: by number of dependent children in the family, 1999, 2009 and 2019
- Single-parent families represent just over a fifth of all households with dependent children
- Under-15 child population set to decline by 4% over the next five years
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- Figure 21: Projected size of UK child population, 2020, 2025 and 2030
- Poor returns have not helped cash Junior ISA sales
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- Figure 22: Average quoted cash ISA interest rates, April 2012-April 2020
- Increase in Junior ISA allowance benefits the few
Companies and Brands – What You Need to Know
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- A diverse market, populated by various provider types
- Digital innovation in the children’s savings market
- Junior Stocks & Shares ISA market continues to attract new entrants
- Limited adspend on above-the-line channels
Competitive Environment and Launch Activity
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- A range of companies supply children’s savings and investment products
- Junior ISA market attracts newcomers
- Nutmeg launches new Junior ISA
- Praemium adds Junior ISA Stocks and Shares option
- KidStart launches KidSave Junior ISA
- Wealthify extends into Junior ISAs
- Zurich launched ‘cradle to grave’ investment solution before sale to Embark
- Nationwide’s Future Saver offers an alternative to the Junior Cash ISA
- YBS and Principality launch new regular saver children’s accounts
- Digital developments: the rise of the pocket-money app
Advertising and Marketing Activity
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- Providers generally invest very little in above-the-line advertising
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- Figure 23: Total above-the-line, online display and direct mail advertising expenditure on savings and investment products, 2015/16-2019/20
- Yorkshire Building Society looks to “safeguard the financial futures of British children”
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- Figure 24: Total above-the-line, online display and direct mail advertising expenditure on identified children’s savings products, 2011-15
- Providers also invest in digital media and sponsorship activity
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Almost half of parents are regularly saving for their children
- Parents favour cash over equity investment
- Most parents want a say in when their child gets access to their savings
- Two thirds are keeping their children’s savings a secret
- 45% expect their children to use CTF money to fund education
Who Saves for Children?
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- Three in four parents are saving for their children
- Higher-income households offer growth opportunities post-COVID-19
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- Figure 25: Proportion of parents who are saving for children, April 2020
- Many grandparents are also contributing to their child’s saving
- COVID-19 could boost financial support from grandparents
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- Figure 26: Other family members or friends who are saving for children, April 2020
Product Ownership
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- Penetration of Junior ISAs will eventually overtake Child Trust Funds
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- Figure 27: Ownership of children’s savings and investment products, April 2020
- Cash is preferred over equity investments
- 9% of parents say their child has an NS&I product…
- …while 3% have pension savings
Parents’ Hopes and Expectations
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- Most parents want a say over when their child can access their savings
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- Figure 28: Parent aspirations and interests in regards to their children’s savings/investments, April 2020
- Not all parents are confident of their child using their savings wisely
- 49% are interested in investing in the stock market
- Interest in trusts extends beyond the wealthy
- Three in five parent-savers plan to increase contributions over the coming year
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- Figure 29: Parents who are planning to increase their children’s savings over the coming year, by saving frequency, April 2020
- High level of transfer activity expected
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- Figure 30: Parents who are planning to transfer their children’s savings/funds to another product/provider over the coming year, by ownership of the most popular product types, April 2020
Teaching Children the Value of Money
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- 46% of parents give their children pocket money or an allowance
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- Figure 31: Activities or strategies used to teach children the value of money, by frequency of saving, April 2020
- 13% of parents are subscribing to pocket money apps for their children
- 29% of parents play games that help children learn about money
- Only a third of parents have told their children about their savings
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- Figure 32: Proportion of parents who have told their children about their savings or investments, by frequency of saving, April 2020
CTF Maturity Plans
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- 39% expect their child to reinvest their CTF money at maturity…
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- Figure 33: What parents expect their children will do with their Child Trust Fund at maturity, April 2020
- …while 45% anticipate it going towards paying for university or college
Appendix – Data Sources and Abbreviations
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- Abbreviations
- Consumer research methodology
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