Table of Contents
Introduction and Abbreviations
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- Main definitions
- Consumer research
- ACORN
- Nielsen Media Research
- Abbreviations
Premier Insight
Executive Summary
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- An ever changing product
- Double whammy hits ISAs
- Most people do not save
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- Figure 1: Average annual savings per adult aged 18+, 1999-2004
- Mini ISAs hit the big time
- Maxi ISAs suffer
- Life goes on, for now
- A competitive landscape
- Legal & General leads the equity list
- Over half of all cash ISAs are sold direct…
- …but tied agents/salesforces sell more equity ISAs than other providers
- ABs are the prime targets…
- …but there is room for greater growth among the young
- Bank or building society staff have the consumer’s ear
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- Figure 2: The three main influencing factors in provider selection, by type of ISA held, March 2004
- Four in ten consumers would be willing to take a risk on equity ISAs
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- Figure 3: Risk profile of prospective ISA customers, March 2004
- Where next?
Market Background
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- ISA is a…
- …replacement for PEPs and TESSAs
- Three of a kind
- Less is more?
- Open to all?
- Beating the tax rap
- Sandler Review
- CAT standards
- CAT standards for cash ISAs
- CAT standards for stocks and shares ISAs
- CAT standards for life insurance ISAs
- Heavy weather rocks ISAs
Market Drivers
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- Up for it?
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- Figure 4: Consumer confidence, by income band, July 2002-April 2004
- Rising interest?
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- Figure 5: Bank of England base rate, May 1992-May 2004
- More debt, but the economy’s healthy
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- Figure 6: Total PDI, consumer expenditure, savings and the savings ratio, at constant 1999 prices, 1999-2008
- The average UK consumer saves just £900 a year
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- Figure 7: Average annual savings per capita, 1999-2008
- Taking stock
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- Figure 8: Daily index movements of the FTSE 100 and FTSE All Share, January 1996-March 2004
- Risky business
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- Figure 9: Level of agreement with statement ‘Owning stocks and shares is too risky an investment for me’, 1999-2003
- Breaking the breaks
- Goodbye to insurance ISAs…
- …and farewell to all ISAs?
Market Size
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- Mini ISA, major product
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- Figure 10: Number of mini and maxi ISAs opened in year and amounts subscribed, 1999/2000-2003/04
- Mini ISAs popular across the board
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- Figure 11: Number of accounts opened during year, by type of mini ISA, 1999/2000-2003/04
- Consumers spent £21 billion on mini ISAs in 2003/04
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- Figure 12: Amounts subscribed during year, by type of mini ISA, 1999/2000-2003/04
- Life insurance mini ISAs account for under 1% of total subscriptions
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- Figure 13: Distribution of mini ISAs, by type, 2003/04
- Average subscription per account falls
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- Figure 14: Average subscription per account, by type of mini ISA, 1999/2000-2003/04
- Maxi market shrinking…
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- Figure 15: Amounts subscribed during year, by component of maxi ISA, and average subscription per account, 1999/2000-2003/04
- …but the potential is still there
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- Figure 16: Distribution of maxi ISAs, by component, 2003/04
- TESSA-only ISAs set for rise in popularity
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- Figure 17: Amounts subscribed from matured TESSAs into ISAs and number of TESSA-only ISAs, 2000/01-2002/03
- Market value of equity ISAs creeps up, while cash ISAs shoot ahead
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- Figure 18: Market value of funds held in ISAs – stocks and shares versus cash components, as of 5 April, 2000-03
- 97% of cash ISAs are cash on deposit accounts
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- Figure 19: Market value of funds held in ISAs by type of component, as of 5 April, 2000-03
- Unit trusts and OEICs hold two thirds of all stocks and shares ISAs
- Insurance component grows towards oblivion
Key Players and the Competitive Environment
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- A highly competitive market…
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- Figure 20: Major banks and building societies active in the ISA marketplace, UK 2004
- …but not an exclusive one
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- Figure 21: Selected other providers active in the ISA marketplace, 2004
- Not only…but also
- Building societies have the largest share of the market
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- Figure 22: Distribution of ISAs held, by type of provider, 2001-03
- Mini success
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- Figure 23: Distribution of mini versus maxi ISAs, by type of provider, 2003
- Cash ISAs are widely available
- Legal & General provides 10% of all equity ISAs
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- Figure 24: Top ten providers of ISA funds, by funds under management as at March 2003 and March 2004
- Life insurance
Distribution
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- In this section of the report the routes to market for ISAs are considered. There are several different avenues via which consumers can obtain an ISA, with the direct route being the most common, particularly for mini cash ISAs, although far from being exclusive. Traditional routes will be considered alongside newer emerging methods of attracting business, such as the Internet, which are being utilised to ever greater extents in order to reduce costs and offer more competitive products.
- The direct line
- Most banks, building societies and high street independent financial advisers will have literature readily available explaining the types of product that they provide. These providers will offer ISAs that are designed to appeal to a wide range of people. In the case of the banks and building societies, it is also likely to be the case that the ISAs will be tailored to suit, and actively promoted to, existing customers.
- Aside from strategically placing product pamphlets by the counters and cashpoints, these providers are also at liberty to send out product information to their massive customer base and make use of their expansive websites to raise their profile.
- Feel the force
- Stuck in the middle
- Most cash ISAs sold direct
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- Figure 25: Distribution of cash ISAs, by value, 2003/04
- Equity ISAs
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- Figure 26: Distribution of stocks and shares ISAs, by value, 2003/04
- Interactive investments
- Square deal for square eyes
Advertising and Promotion
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- 40% of adspend goes on unit trust ISAs
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- Figure 27: Trends in ISA advertising expanditure, by product sub-category, 1999/2000-2003/04
- Pressing on with the message
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- Figure 28: Distribution of total adspend, by media type, 1999/2000-2003/04
- Top ten are big adspenders
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- Figure 29: Top ten ISA advertisers, 2002/03 and 2003/04
- Legal & General is top of the pops
- Prudential rockets to second spot
- Fidelity spends over £1 million through press adverts
- Jupiter continues to promote brand awareness
- Four fifths of Halifax’s adspend goes on press campaigns
- Abbey and Alliance & Leicester rein in adspend
Consumer Financial Activity
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- Consumers are confident about financial activity going forward
- Demand on the main financial services providers (MFSP)
- Borrowing, saving and debt repayment activity
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- Figure 30: Savings, investment, borrowing and debt repayment – consumers’ expected activity, September 2002-March 2004
- ABs, 23-29s and those earning over £35,000 are likely to be the most financially active
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- Figure 31: Expected financial activity, by socio-demographic and income groups, March 2004 and average for the last eight Quarters
- Consumers looking to service debt
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- Figure 32: Leading financial activities planned in the next six months, September 2002-March 2004
- HSBC and NatWest were strong in the latest quarter
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- Figure 33: Leading main financial services providers, market shares, March 2003-March 2004
- Bank of Scotland can expect active customers in investments sector
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- Figure 34: Saving, investment and lending, market sizes, by expected customer demand and brand leaders, March 2004
- RBS and BoS customers will be the most active
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- Figure 35: Activity levels of main financial providers’ customer bases, March 2004
The Consumer
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- 23% of respondents splash the cash
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- Figure 36: Ownership of selected savings and investment products, by gender, age and socio-economic group, March 2004
- Time up for TESSAs and PEPs
- Older and wiser?
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- Figure 37: Penetration of ISAs, TESSAs and PEPs, by gender, age and socio-economic group, March 2004
- Cash ISAs particularly popular among married consumers
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- Figure 38: Penetration of ISAs, TESSAs and PEPs, by marital status, lifestage, Mintel’s Special Groups and working status, March 2004
- ISAs far more popular among wealthier consumers
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- Figure 39: Penetration of ISAs, TESSAs and PEPs, by tenure, gross annual household income, region and ACORN category, March 2004
- Consumers living in London least likely to have an ISA
- Just 17% of red-top readers have a cash ISA
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- Figure 40: Penetration of ISAs, TESSAs and PEPs, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, March 2004
- One in five Waitrose shoppers have equity ISAs
- Influencing factors in provider selection
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- Figure 41: Influencing factors in provider selection, by order of importance and type of ISA held, March 2004
- Young consumers swayed by adverts
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- Figure 42: Influencing factors in provider selection, by gender, age and socio-economic group, March 2004
- IFAs seen to cater for big investors…
- …and third agers?
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- Figure 43: Influencing factors in provider selection, by lifestage, marital status and working status, March 2004
- 53% of ISA owners in E – Aspiring areas take bank or building society advice
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- Figure 44: Influencing factors in provider selection, by tenure, region and ACORN category, March 2004
- Television advertising falls to impress
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- Figure 45: Influencing factors in provider selection, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, March 2004
Consumer Attitudes and Targeting Opportunities
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- AB third agers represent a key target group
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- Figure 46: CHAID analysis showing the main target group for cash ISAs and stocks and shares ISAs, March 2004
- Marketing message
- 51% of cash ISA owners prefer this product to ordinary savings accounts
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- Figure 47: Proportion who agree with statements about ISAs – total sample versus ISA, TESSA and PEP holders only, March 2004
- 43% of stocks and shares ISA owners would take another one out
- Younger consumers most interested in finding out more about ISAs
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- Figure 48: Profile of prospective ISA buyers, by gender, age and socio-economic group, March 2004
- Where will new business come from?
- Two thirds of those who may buy another ISA within 12 months are married
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- Figure 49: Profile of prospective ISA buyers, by lifestage, marital status and working status, March 2004
- Cultivating a saving culture
- A third of those who don’t have an ISA but would like to know more are renters
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- Figure 50: Profile of prospective ISA buyers, by tenure, region and ACORN category, March 2004
- Four fifths of those considering arranging an ISA are mobile phone users
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- Figure 51: Profile of prospective ISA buyers, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, March 2004
- Pressing matter
- Current ISA owners keenest to risk another
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- Figure 52: Proportion who agree with statements about ISAs, by prospective target groups, March 2004
- Saving for a rainy day is the prime motivation
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- Figure 53: Main motivation for saving, in order of importance, total sample and by type of ISA held, March 2004
- Additional ISAs for rainy day savings are popular
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- Figure 54: Main motivation for saving, in order of importance, by prospective target groups, March 2004
- Multiple reasons to save
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- Figure 55: Correlation analysis on main motivations to save, March 2004
- Debt busters
- Different groups, different reasons
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- Figure 56: Top five reasons, by gender, March 2004
- The young want to travel, the old wait for rain
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- Figure 57: Top five reasons, by age, March 2004
- Saving for the unexpected is top reason for all socio-economic groups
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- Figure 58: Top five reasons, by socio-economic group, March 2004
- Worth the risk?
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- Figure 59: Risk tolerance, total sample and by type of ISA held, March 2004
- A quarter of ISA owners would take a medium risk
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- Figure 60: Risk tolerance, by prospective target groups, March 2004
- Of those that would consider an equity ISA, 50% are medium risk takers
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- Figure 61: Risk tolerance, by agreement with statements about ISAs, March 2004
- 28% of ABs will take a medium-sized risk
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- Figure 62: Risk tolerance, by gender, age, socio-economic group and lifestage, March 2004
- 11% of consumers would take a high risk to secure a house deposit
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- Figure 63: Risk tolerance, by main motivation to save, March 2004
Industry Views
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- A taxing issue
- Less is more?
- CAT lovers?
- The end of the road?
The Future
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- Cashing in
- Stocks and snares?
- A bold move
- The rich get richer, but what about the poor?
- There’s no business like show business!
- DIY mania
- TESSA of the variables
- The big get bigger
- Risk takers could warm to equity products
- Too early to say
Forecast
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- Figure 64: Forecast of UK ISAs market, by sector, 2004-09
- Consumer confidence affects the purchase of equity ISAs
- Cash ISAs remain attractive
- Aggressive promotion will convince consumers to purchase ISAs
- Easy-to-understand products will help sales
- Factors incorporated
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