Table of Contents
Executive Summary
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- Impact of COVID-19 on the retail investment market
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- Figure 1: Short, medium and long-term impact of COVID-19 on savings and investments, 8 October 2020
- The market
- Growth is expected in the investment market in 2020
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- Figure 2: Forecast of the value of gross retail sales, 2015-25
- Fund platform and direct sales see significant growth
- ESG investing comes under increased regulatory scrutiny
- Companies and brands
- Most top investment firms see their assets under management decline
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- Figure 3: Top 10 asset managers, by total retail funds under management, March 2019 and March 2020
- AJ Bell becomes the latest investment firm to launch a savings marketplace
- High street banks look to target those new to investing
- The consumer
- The proportion of people with a small amount of investable assets has grown
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- Figure 4: Level of investable assets, July 2020
- One in three savers say they own an investment product not related to a pension
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- Figure 5: Ownership of savings and investment products, July 2020
- Just under one third are comfortable taking risks…
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- Figure 6: Level of comfort when taking risks, July 2020 vs July 2019
- …however, a minority have had their interest piqued by the outbreak
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- Figure 7: Impact of COVID-19 on willingness to take risks, July 2020
- Over 40% of investors have not reacted to the crisis
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- Figure 8: Investor response to the COVID-19 outbreak, July 2020
- 28% are interested in opening a new investment product
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- Figure 9: Investment intentions over the next 12 months, July 2020
- Providing a convenient set-up is crucial to expanding reach
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- Figure 10: Investment purchase drivers, July 2020
- Investors are looking for simplicity with fees and data to help inform decisions
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- Figure 11: Reasons for choosing an investment service, July 2020
- Close to three quarters find it difficult to identify an ESG investment
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- Figure 12: Attitudes towards ethical investing, July 2020
Issues and Insights
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- COVID-19 turmoil will provide opportunities to attract new investors
- Convenience is increasingly important but means different things to different investor groups
- ESG education could provide a useful point of engagement
The Market – Key Takeaways
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- COVID-19 turmoil was short-lived, but considerable uncertainty remains
- Lockdown boosted savings and increased investment activity
- Further interest rate cuts will boost the number looking to invest
- COVID-19 disruption leads to a drastic increase in both platform and D2C business
- ESG investing falls under the regulatory spotlight
Market Size and Forecast
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- Impact of COVID-19 on the retail investment market
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- Figure 13: Short, medium and long-term impact of COVID-19 on savings and investments, 8 October 2020
- Gross and net retail investment sales are expected to increase in 2020
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- Figure 14: Retail sales of UK funds and recognised overseas funds, 2012-20
- Steady growth is predicted over the next five years
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- Figure 15: Forecast of the value of gross retail sales, 2015-25
- Figure 16: Forecast of the value of gross retail sales, at current prices, 2015-25
- Market drivers and assumptions
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- Figure 17: Key drivers affecting Mintel’s market forecast (prepared on 1 October 2020), 2020-24
- Learnings from the last recession
- A sharp decline and fast recovery were followed by slow growth
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- Figure 18: Retail sales of unit trusts and OEICs, 2007-12
- Forecast methodology
Market Segmentation
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- Investors turn to money market funds during the initial period of uncertainty
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- Figure 19: Net retail sales of UK funds and recognised overseas funds, by asset type, Q1 2018-Q2 2020
- Total funds under management recover after a sharp drop in March
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- Figure 20: Total retail assets under administration of UK funds and recognised overseas funds, by asset type, July 2019-July 2020
- Stocks and share ISAs declined in popularity in 2018/19…
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- Figure 21: Number of ISAs subscribed to each component, 2008/09-2018/19
- Figure 22: Amount subscribed to each component, 2008/09-2018/19
- …and look set for a slower recovery from the COVID-19 outbreak
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- Figure 23: Total ISA funds under management, July 2019-July 2020
Channels to Market
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- Fund platform sales continue to see significant growth…
- …while direct and execution-only sales look set to bounce back in 2020
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- Figure 24: Gross retail sales, by distribution channel, 2014-H1 2020
Market Drivers
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- A swift recovery in GDP will prevent an extended slump in the investment market
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- Figure 25: Annual GDP, 2007-24 (central forecast)
- A sharp jump in unemployment is expected
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- Figure 26: Annual unemployment rate, 2007-24
- An increase in saving is seen in Q1 2020
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- Figure 27: Household savings ratio, 2012-19
- The BoE explores the possibility of cutting rates to below zero
- Ethical investing is a growing factor
- Increasing negativity over the impact of Brexit on savings and investments
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- Figure 28: Perceived impact of Brexit on the value of savings and investments, January-September 2020
Regulatory and Legislative Changes
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- ESG investing comes under increased scrutiny…
- …while the CFA ask for clearer definitions on ESG funds
- Rising regulatory costs will increase the ‘advised gap’
- HM Treasury offers update on proposed changes to PRIIPS regulation
- FCA seeks to investigate the issue of ‘unsuitable’ investment advice
Companies and Brands – Key Takeaways
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- Banks look to attract those new to the market
- Using saving as a gateway to investing
- ESG developments ramp-up
Market Share
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- Most firms saw a decline in assets under management in 2020
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- Figure 29: Top 10 asset managers, by total retail funds under management, March 2019 and March 2020
Competitive Strategies
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- AJ Bell becomes the latest provider to launch a cash savings solution
- High street banks unveil developments to target those new to investing
- Barclays Plan & Invest
- HSBC launches its multi-asset buy list
- New developments aim to improve the advised process
- AJ Bell’s new fund research tool
- Standard Life’s new client portal
- Firms continue to expand their ESG investment range…
- …while interactive investor launches the UK’s first rated list of ethical funds
- FinTechs use Open Banking to increase the ease of investing
- Through Moneybox’s ‘round up’ feature
- Nutmeg and Freetrade improve the payment experience
- New low-cost developments for later-life planners
- Through the long-anticipated launch of the Vanguard SIPP
- Moneybox announces its mobile SIPP
- AJ Bell unveils its low-cost retirement investment account
Advertising and Marketing Activity
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- Fidelity continues to be the largest advertiser
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- Figure 30: Total above-the-line, online display and direct mail advertising expenditure on investment products, by advertiser, 2017/18-2019/20
- Brands take a differing approach COVID-19 communication
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- Figure 31: Moneybox communication on Twitter, March 2020
- Figure 32: Hargreaves Lansdown communication on Twitter, March 2020
- Make my Money Matter campaign encourages changes in the pension market
- Nielsen Ad Intel coverage
The Consumer – Key Takeaways
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- COVID-19 turmoil creates new business opportunities
- Convenient solutions to bring investing into the mainstream
- Existing relationships and access to advice will attract those new to the market
- Education about ESG investing provides a point of engagement
Impact of COVID-19 on Consumer Sentiment
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- 28% are worse off financially than a year before
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- Figure 33: Trends in current financial situation compared to a year ago, January-September 2020
- Consumer confidence has also declined
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- Figure 34: Trends in consumer sentiment for the coming year, January-September 2020
- Majority are concerned about the impact of COVID-19 on saving and investments
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- Figure 35: Perceived impact of COVID-19 on the value of savings and investments, 16 April-24 June
Investable Assets
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- Close to 30% have less than £5,000 in savings and investments
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- Figure 36: Level of investable assets, July 2020
- Millennials are well placed to start on their investment journey
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- Figure 37: Level of investable assets, by generation, July 2020
Saving and Investment Product Ownership
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- Just one in three own a non-pension related investment product
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- Figure 38: Ownership of savings and investment products, July 2020
- Engaging with lower-level savers could drive more consideration of investing in the long term
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- Figure 39: Ownership of investment products, by value of investable assets, July 2020
Attitude towards Risk
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- One third are comfortable taking risks
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- Figure 40: Level of comfort when taking risks, July 2020 vs July 2019
- Non-investors are extremely reluctant to take risks
- Product ownership reflects appetite for risk
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- Figure 41: Level of comfort when taking risks, by saving and investment product ownership, July 2020
- Over 40% are less willing to take risks in the wake of the outbreak
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- Figure 42: Impact of COVID-19 on willingness to take risks, July 2020
Investor Response to the COVID-19 Outbreak
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- A large proportion of investors have not reacted to the crisis
- Providing a singular view of investments will be well received
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- Figure 43: Investor response to the COVID-19 outbreak, July 2020
- More experienced investors are more likely to have made significant changes
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- Figure 44: Investor response to the COVID-19 outbreak, by number of different investment products owned, July 2020
- Providers can help investors focus on long-term goals
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- Figure 45: Investor response to the COVID-19 outbreak, by impact of COVID-19 on willingness to take risks, July 2020
Investment Intentions
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- Over one in four are interested in opening a new investment product
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- Figure 46: Investment intentions over the next 12 months, July 2020
- A fifth of non-investors are looking to open an investment
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- Figure 47: Investment intentions over the next 12 months, by saving and investment ownership, July 2020
- COVID-19 is likely to lead to an increase in those opening investments
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- Figure 48: Investment intentions over the next 12 months, by impact of COVID-19 on willingness to take risks, July 2020
Investment Purchase Drivers
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- Convenience ranks above both reputation and choice
- Greater choice and innovation could lead to a compromise on cost
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- Figure 49: Investment purchase drivers, July 2020
Reasons for Choosing an Investment Service
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- A simple pricing structure is most important when choosing an investment service
- Previous experience and a well-known brand matter more to the younger market
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- Figure 50: Reasons for choosing an investment service, July 2020
- Potential new investors are looking for extra advice and convenience
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- Figure 51: Proportion of people interested in investments identifying a factor as important when choosing an investment provider, by ownership of investments, July 2020
Attitudes towards Ethical Investing
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- Scope to be more proactive in tackling ESG confusion
- Firms must do more to improve the visibility of advertising campaigns
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- Figure 52: Attitudes towards ethical investing, July 2020
- 18-34s are keen to learn more…
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- Figure 53: Response to the statement, ‘I would like to learn more about how to invest in an ethically and socially responsible way, by age, July 2020
- …while there is scope for more dedicated ESG investment accounts
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- Figure 54: Response to the statement, ‘I am more interested in the returns I can make than what I invest in, by level of investable assets, July 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- Qualitative research
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