Table of Contents
Introduction and Abbreviations
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- Scope of the report
- Key sources
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Premier Insight
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- Assist parents with budgeting and financial planning
- Reach non-product holders through the Internet
- Use the convenience of the supermarket to tackle apathy
- CTF providers must target prospective parents...
- ...but don’t neglect the non-CTF target group
Executive Summary
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- Shifting demographics...
- …and their consequences
- Changing family composition
- New market opportunity: the Child Trust Fund
- A highly fragmented and competitive marketplace
- Market leaders
- A varied distribution mix
- Advertising activity boosted by the CTF
- A growing pool of savers
- Popular products
- Attitudes towards saving
- General market outlook
- CTF market potential
Market Background
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- The correlation between popularity and risk
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- Figure 1: Children’s savings: popularity of product versus risk, 2005
- The pros and cons of mid-risk savings plans
- CTF set to become the largest component in the children’s savings market
- Less interest in high-risk products
- Who does the money belong to?
- Tax implications
- More about savings accounts
- Easy-access/no-notice accounts
- Notice accounts
- Bonds or term accounts
- Regular savings accounts
- More about National Savings & Investments
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- Figure 2: Number of accounts and value of funds invested – selected NS&I products, August 2005
- Premium Bonds
- Index-linked Savings Certificates
- Children’s Bonus Bond
- Easy Access Savings Account
- More about ISAs
- More about children’s savings plans
- More about stock market-based investments
- Trust funds
- Stakeholder pensions
Market Drivers
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- Demographic trends
- After falling sharply, the fertility rate is levelling out
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- Figure 3: Total fertility rate, by year of birth of woman – UK, 1950-2000
- Later childbearing
- A variety of family structures
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- Figure 4: GB households and family types, 1971-2004 (at intervals)
- The rise of the lone-parent family
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- Figure 5: Percentage of all children in GB living in different family types, 1972-2004 (at intervals)
- Socio-economic factors
- Single parents struggle to save
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- Figure 6: Distribution of household savings, by family strucure and amount, 2003/04
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- Figure 7: Frequency of saving for children, by marital status, July 2005
- Parent couples are three times as likely to be ABs as single parents
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- Figure 8: Percentage of GB households with children aged 0-15 in each socio-economic group compared to all households, 2004
- Single parents are five times more likely to be on the lowest income scale than parent couples
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- Figure 9: Percentage of GB households with children aged 0-15 in each income bracket compared to all households, 2004
- Economic and investment conditions
- Strong growth in savings forecast
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- Figure 10: Total PDI, consumer expenditure, savings and the savings ratio, at 2000 prices, 1995-2010
- The importance of interest rates
- The stock market recovers ahead of investor confidence
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- Figure 11: FTSE 100 and FTSE All Share – daily index movements, June 1998-June 2005
- A revival in cash-based savings
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- Figure 12: Composition of household financial assets, at current prices, 2000-04
- Emotive drivers
- University education is parents' main savings priority
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- Figure 13: Main motivations for saving for children, August 2003
- The rising cost of education
- The Child Trust Fund
- A new initiative to encourage saving and self-reliance
- Wide range of accounts on offer
- Secondary effect: boosting interest in youth savings
Market Size and Trends
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- Child population is expected to decline by 3% over the 2001-09 period
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- Figure 14: UK child population, by age, at two-year intervals, 2001-09
- Big increase in the number saving regularly for children…
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- Figure 15: Proportion and estimated number of adults saving regularly or occasionally for children, 2003 and 2005
- ...and in the number choosing to invest in ordinary savings accounts
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- Figure 16: Ownership of children’s savings and investment products by all adults, 2003 and 2005
- The size of CTF market
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- Figure 17: Number of CTF vouchers issued and deposited by 20 May 2005 and 20 August 2005
- Significant take-up of cash CTFs
- More than two thirds of CTF accounts have equity exposure
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- Figure 18: Child trust accounts opened – proportional split between cash and equity accounts, May 2005
- An expanding market
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- Figure 19: Projected size of CTF market, 2002/05-2009/10
Key Players and the Competitive Environment
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- Introducing the main contenders
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- Figure 20: Pictorial description of market structure and composition, 2005
- Banks and building societies
- Friendly societies
- Insurance companies
- Investment companies
- National Savings & Investments
- Retailers and other high street brands
- A shifting landscape
- The front runners
- engage Mutual Assurance
- Family Investments
- The Children’s Mutual
- The main types of CTF account
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- Figure 21: CTF savings accounts, by annual equivalent rate, August 2005
- The stakeholder CTF is the default option and the government’s preferred choice
- Greater investment choices with non-stakeholder CTFs
- Traditional children’s savings accounts
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- Figure 22: Top 11 children’s accounts, by AER, with £10 investment, August 2005
Distribution and the Internet
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- 70% of families have Internet access
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- Figure 23: Internet penetration – GB, by gender, socio-economic group, age, region, working status and lifestage, January 2001-April 2005
- The rising prominence of affinity partners
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- Figure 24: Three CTF providers and their distribution partners, 2005
- Mixed interest in the CTF from the IFA sector
Advertising and Promotion
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- Putting the fun back into advertising: children’s savings products
- Adspend on savings accounts given a boost
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- Figure 25: Total advertising expenditure on selected savings and investment products, 2000/01-2004/05
- The government tops the list of CTF advertisers
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- Figure 26: Top 12 advertisers of children’s savings plans, 2003/04 and 2004/05
- Press and direct mail are the channels of choice for providers
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- Figure 27: Proportional distribution of children’s savings plans, by media type, 2003/04 and 2004/05
Consumer Financial Activity
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- About the Financial Activity Bulletin
- High activity levels from June 2005 onwards
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- Figure 28: Savings, investment, borrowing and debt repayment – consumers’ expected activity, at quarterly intervals, March 2004-June 2005
- Younger respondents looking to refresh their financial affairs
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- Figure 29: Expected financial activity, by socio-demographic and income groups, June 2005 and average for the last 14 quarters
- Greater activity than a year ago
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- Figure 30: Leading financial activities planned in the next six months, at quarterly intervals, June 2004-June 2005
- HSBC and Halifax have gained the most ground
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- Figure 31: Leading main financial services providers: market shares, at quarterly intervals, June 2004-June 2005
- Nationwide is strong in savings
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- Figure 32: Proportion expecting to undertake various financial activities in the next six months, June 2005
- The Scottish banks and NatWest have the most active customer bases
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- Figure 33: Activity levels of main financial providers’ customer bases, June 2005
The Consumer and Product Ownership
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- Just over a quarter of UK adults have children under the age of 15
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- Figure 34: Profile of total sample, by lifestage and presence of children in household, 2003 and 2005
- One-child family households are now the most common type
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- Figure 35: Number of children aged 0-14 in family households, 2003 and 2005
- Mintel’s research reveals an increase in the number of parents saving for children
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- Figure 36: Frequency of saving for children, 2003 and 2005
- Mothers are much more likely than fathers to save for their offspring
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- Figure 37: Proportion of adults saving regularly or occasionally for own children or grandchildren, by gender, age, socio-economic group and working status, July 2005
- Cohabiting couples are better savers than married couples
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- Figure 38: Proportion of adults saving regularly or occasionally for own children or grandchildren, by marital status, lifestage and Mintel’s Special Groups, July 2005
- Young families record the biggest growth in saving for children
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- Figure 39: Proportion of parents who save for their children, by detailed family lifestage breakdown, July 2005
- Larger families also show significant improvements
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- Figure 40: Proportion of parents who save for their children, by number of children present in household, July 2005
- The higher the income, the greater the propensity to save
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- Figure 41: Proportion of adults saving regularly or occasionally for own children or grandchildren, by tenure, gross annual household income, region and ACORN category, July 2005
- ASDA and Iceland shoppers are most active savers
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- Figure 42: Proportion of adults saving regularly or occasionally for own children or grandchildren, by new technology usage, newspaper readership, commercial TV viewing and supermarket most frequently visited, July 2005
- Cash-based savings accounts are the strong favourite with parents
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- Figure 43: Savings and investment products held for/on behalf of children, by order of popularity, July 2005
- Total product ownership among savers increases 10% in two years
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- Figure 44: Savings and investment products held for/on behalf of children, by order of popularity, 2003 and 2005
- Ownership is highest among regular savers
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- Figure 45: Savings and investment products held for/on behalf of children, by frequency of saving, July 2005
- Grandparents are keen on savings plans
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- Figure 46: Savings and investment products held for/on behalf of children, by relationship to child, July 2005
- Product preference varies with number of children
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- Figure 47: Savings and investment products held for/on behalf of children, by number of children present in household, July 2005
- High product ownership among 45-54-year-olds
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- Figure 48: Savings and investment products held for/on behalf of children, by gender, age, socio-economic group, working and marital status, July 2005
- Higher income groups generally show higher product penetration
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- Figure 49: Savings and investment products held for/on behalf of children, by tenure, household income, region and ACORN category, July 2005
- Mid-market tabloids provide best targeting opportunity
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- Figure 50: Savings and investment products held for/on behalf of children, by new technology usage, newspaper readership, commercial TV viewing and supermarket most frequently visited, July 2005
- Nine in ten parents say it’s essential children have savings for the future
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- Figure 51: Proportion who agree/disagree with four statements concerning the CTF and saving for children, by lifestage, July 2005
- Infrequent savers could be encouraged to spend less on birthday and Christmas presents and instead invest the cash
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- Figure 52: Proportion who agree/disagree with four statements concerning the CTF and saving for children, by frequency of saving, July 2005
- Parents with two children show greatest support for CTF
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- Figure 53: Proportion who agree/disagree with four statements concerning the CTF and saving for children, by number of children, July 2005
- 25-34-year-olds are most positive
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- Figure 54: Positive versus negative attitudes towards CTF and saving for children, by gender, age, socio-economic group and region, July 2005
- Large families are less optimistic
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- Figure 55: Positive versus negative attitudes towards CTF and saving for children, by lifestage, number of children, age of children and frequency of saving for children, July 2005
- Further analysis
Consumer Attitudes and Targeting Opportunities
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- CHAID analysis isolates the core target groups
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- Figure 56: Target groups identified for the children’s savings market, July 2005
- The more products held, the more balanced the portfolio
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- Figure 57: Ownership of children’s savings products, by number of product types held, July 2005
- A quarter of families have no children’s savings product
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- Figure 58: Children’s savings – number of product types held, by lifestage, July 2005
- Younger children are better-off
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- Figure 59: Children’s savings – number of product types held, by number of children in household, age of children and frequency of saving for children, July 2005
- Half of all families like the idea of the CTF
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- Figure 60: Proportion who agree with various statements relating to the CTF and saving for children – total sample and famiilies only, July 2005
- Targeting non-eligible children
- Around two thirds of CTF target group say they have received or are due to receive a voucher
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- Figure 61: Agreement with various statements relating to the CTF and saving for children by the CTF target group, July 2005
- Cluster analysis: dissecting the family lifestage into three groups
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- Figure 62: Segmenting the family lifestage group by saving for children clusters, July 2005
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- Figure 63: Saving for children clusters, by agreement with various statements relating to the CTF and saving for children, July 2005
- Offer practical savings advice and a simple, easily accessible product
- Tackling the Least Engaged
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- Figure 64: Children’s savings product ownership, by saving for children clusters, July 2005
- Half of all parents aged 18-24 fall into the Baby on Board camp
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- Figure 65: Saving for children clusters, by gender, age and socio-economic group and working status, July 2005
- Strong variances according to marital status
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- Figure 66: Saving for children clusters, by marital status, number of children, age of children and frequency of saving, July 2005
- Renters will probably have other saving priorities than the CTF
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- Figure 67: Saving for children clusters, by tenure, gross annual household income, region and ACORN category, July 2005
- TV advertising could prove effective for promoting the CTF
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- Figure 68: Saving for children clusters, by new technology usage, newspaper readership, commercial TV viewing and supermarket most frequently visited, July 2005
Industry Views
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- Sound reasons behind slow take-up
- Ensuring success
- What’s the appeal of cash CTF accounts?
- Financial education is key, but it takes time
- A flaw in the design or a fundamental strength?
- High hopes for the CTF
The Future
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- In the pink
- Addressing the non-savers...
- ...and non-product holders
- Appealing to parents’ sense of fair play
- Healthy prospects for growth
- Grandparents’ participation will become increasingly important
- Supporters of the CTF are optimistic of success
- Early signs suggest good level of parental commitment
- Still early days
- Some final thoughts
Forecast
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- Part 1: Forecasting the size of the target market
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- Figure 69: Adults who save for their own children or other children, by gender, age, socio-economic group and lifestage, July 2005
- Scenario-based forecast
- Scenario 1: Standard
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- Figure 70: Scenario 1– forecast of adults who save for children, 2005-10
- Scenario 2: Positive
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- Figure 71: Scenario 2 – forecast of adults who save for children, 2005-10
- Part 2: The Child Trust Fund
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- Figure 72: Projected value of the child trust fund market, 2002/05-2009/10
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