Table of Contents
Introduction and Abbreviations
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- Key Sources
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Premier Insight
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- Consumers look for names they recognise
- Giving consumers a hand in getting started
- A large existing customer base is an advantage
- Women-friendly IFAs
- Student discounts
Executive Summary
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- Low interest rates force consumers to look elsewhere for better returns
- Sales of unit trusts and OEICs reach ten-year high in 2005
- Brand strength is crucial for mass-market investment sales
- Banks and building societies are first stop for many customers
- Building brand awareness is essential
- Are people more willing to take on risk?
- As investor confidence increases, so will sales
Market Background and Definitions
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- In the context of saving and investing
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- Figure 1: Risk profile of selected savings and investments
- What is a collective investment?
- The pros and cons of collective investments
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- Figure 2: Summary of main advantages and disadvantages of collective investments, 2006
Market Drivers
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- Improved attitudes towards saving
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- Figure 3: PDI, consumer expenditure, savings and the savings ratio, 2000-11
- Consumers nearing retirement are good candidates for collective investments
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- Figure 4: UK population trends, by age group, 2004-29
- Investor confidence is closely linked to stockmarket activity
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- Figure 5: FTSE 100 index, daily prices, January 1996-January 2006
- Little reward for saving in cash accounts
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- Figure 6: Bank of England base rate, 1990-2005
- The bulk of equity ISA funds are comprised of collective investments
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- Figure 7: Market value of funds as of 5 April, by type of qualifying investment, 2000-05
- The appeal of property challenges traditional investments
Market Size and Trends
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- New sales reach ten-year high
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- Figure 8: Retail sales of unit trusts and OEICs, 1996-2005
- Equities dominate
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- Figure 9: Unit trust/OEIC funds under management, by asset class, £ billion, 2000-05
- A sustained recovery in retail investor interest is under way
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- Figure 10: Total unit trust/OEIC funds under management, December 2000-March 2006
- ISA funds more than double in value over last five years
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- Figure 11: Total ISA unit trust/OEIC funds under management, December 2000-March 2006
- The investment trust sector is performing well
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- Figure 12: Market capitalisation of investment trusts, 1995-2005
Sector Analysis and Market Trends
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- Figure 13: Leading IMA retail sectors, 2001-06
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Key Players and the Competitive Environment
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- Figure 14: Leading unit trust/OEIC providers by funds under management, April 2006
- A high-street presence can be crucial in the retail market
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- Figure 15: Leading ISA unit trust/OEIC providers by funds under management, April 2006
- Advisers must also play a role in product development
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Distribution and Advice
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- Intermediaries continue to gain share
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- Figure 16: Gross retail sales of unit trusts and OEICs, by distribution channel, 1996-2005
- What will depolarisation do for collective investments?
- Who would you go to for investment help?
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- Figure 17: Sources of advice, May 2006
- The Internet has great potential for the future
- A third of consumers rely on two or more sources of information
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- Figure 18: Repertoire analysis of sources of information, May 2006
Advertising and Promotion
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- Targeted advertising requires a smaller budget
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- Figure 19: Advertising expenditure on financial services, by sector, 2001/02-2005/06
- Adspend on collective investments reduced by half
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- Figure 20: Advertising expenditure on unit and investment trusts, 2001/02-2005/06
- Fidelity increases its adspend
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- Figure 21: Advertising expenditure on unit and investment trusts, 2001/02-2005/06
- The majority of adpsend was dedicated to the press in 2005/06
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- Figure 22: Advertising expenditure, by media outlet, 2005/06
Consumer Financial Activity
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- Consumers looking to save and invest
- Relationship with the main financial-services providers
- Overall activity levels will fall slightly
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- Figure 23: Savings, investment, borrowing and debt repayment – consumers’ expected activity, December 2004-March 2006
- C2s will display higher-than-average financial activity levels
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- Figure 24: Expected financial activity, by socio-demographic and income groups, March 2006 and average for the last 17 quarters
- ISA season will be fruitful for providers
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- Figure 25: Leading financial activities planned in the next six months, March 2005-March 2006
- Slower activity ahead for the property market
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- Figure 26: Intended mortgage and property purchase activity, March 2004-March 2006
- Lloyds TSB sees its position weaken slightly
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- Figure 27: Leading main financial services providers: market shares, March 2005-March 2006
- RBS will feature strongly in the savings/deposits sector
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- Figure 28: Saving, investment and lending market sizes, by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), March 2006
- Bank of Scotland and RBS will have the most active customer bases
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- Figure 29: Activity levels of main financial services providers’ customer bases, March 2006
- HSBC and Halifax customers looking to borrow more
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- Figure 30: Activity intentions and current household financial situation, by Main Financial Services Provider, March 2006
The Consumer and Product Ownership
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- Over 3 million people have a collective investment
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- Figure 31: Financial product ownership, May 2006
- Women shy away from equity-based investments
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- Figure 32: Penetration of savings and investment products, by gender and socio-economic group, May 2006
- Implications
- Ownership of investments increases with age
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- Figure 33: Penetration of savings and investment products, by age, May 2006
- Implications
- Gross annual household income is a major factor affecting ownership of equity-based investments
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- Figure 34: Penetration of savings and investment products, by working status, gross annual household income and tenure, May 2006
- Implications
- Older consumers have the largest repertoire of investments
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- Figure 35: Repertoire analysis of savings/investment products, by gender, age and socio-economic group, May 2006
- Implications
- Aversion to risk works against the sale of riskier investments
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- Figure 36: Most important factors when saving/investing money, May 2006
- High investment returns are more appealing to men
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- Figure 37: Most important factors considered when investing/saving money, by gender, age socio-economic group and region, May 2006
- Implications
- High earners are more likely to look for tax benefits
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- Figure 38: Most important factors considered when investing/saving money, by working status, gross annual household income and tenure, May 2006
- Implications
- Those looking for high returns turn to equity-based investments
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- Figure 39: Most important factors considered when investing/saving money, by products owned, May 2006
- Implications
- Those looking for proven track records more likely to invest in collective investments
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- Figure 40: Most important factors considered when investing/saving money, by products owned, May 2006
- Implications
- Where do potential investors seek advice?
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- Figure 41: Sources of investment advice, May 2006
- Implications
- Multi-product investors seek advice from IFAs
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- Figure 42: Number of savings and investment products by sources of investment advice, May 2006
- Implications
- The more products a consumer has, the more sources consulted for info
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- Figure 43: Number of sources of investment advice by the number of investment products owned, May 2006
- Implications
- ABC1s are likely to head to an IFA for advice
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- Figure 44: Sources of investment advice, by gender, age, socio-economic group and region, May 2006
- Implications
- Do IFAs intimidate less-affluent consumers?
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- Figure 45: Sources of investment advice, by working status, gross annual household income and tenure, May 2006
- Implications
- One in four heavy Internet users would look to the Internet for assistance
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- Figure 46: Sources of investment advice, by technology usage, Internet usage, newspaper readership, commerical TV viewing and supermarket usage, May 2006
- Implications
- More consumers are likely to take a risk
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- Figure 47: Attitudes towards risk, 2004-06
- Implications
- Women are considerably more risk-averse than men
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- Figure 48: Attitudes towards risk, by gender, age, socio-economic group and region, May 2006
- Implications
- Affluence influences attitudes towards risk
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- Figure 49: Attitudes towards risk, by working status, gross annual household income and tenure, May 2006
- Implications
- Broadsheet readers are the keenest to take on a bit of risk
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- Figure 50: Attitudes towards risk, by technology users, Internet usage, newspaper readership, commercial TV viewing, and supermarket usage, May 2006
- Implications
- Risk-takers are more likely to visit an IFA for advice
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- Figure 51: Attitudes towards risk, by where consumers would seek/have sought advice, May 2006
- Implications
- The risk takers like to take control
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- Figure 52: Attitudes towards risk, by which factors are most important when it comes to savings/investing money, May 2006
- Implications
- ‘Safe’ products appeal to all but the most adventurous
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- Figure 53: Attitudes towards risk, by product ownership, May 2006
- Implications
- Three in four adults claim that their attitudes towards risk are unchanged
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- Figure 54: Attitudes towards investing, May 2006
- Implications
- Consumer confusion leads to lack of investment
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- Figure 55: “I would like to put money into investments, but I simply don’t know where to begin”, by product ownership, May 2006
- Implications
- Young people may be keen but confused
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- Figure 56: “I would like to put money into investments, but I simply don’t know where to begin”, by gender, age and socio-economic group, May 2006
- Implications
- Recent risk-takers are more likely to have a range of investments
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- Figure 57: “I am more willing to take a risk with my money today than I was five years ago”, by product ownership, May 2006
- Implications
- Young people are the most likely to be more willing to take a risk
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- Figure 58: “I am more willing to take a risk with my money today than I was five years ago”, by gender, age and socio-economic group, May 2006
- Implications
- Those happy to research are more likely to have a wider range of products
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- Figure 59: “I am happy to spend the necessary time to research potential investment opportunities”, by product ownership, May 2006
- Implications
- More-affluent consumers are happy to do their own research
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- Figure 60: “I am happy to spend the necessary time to research potential investment opportunities”, by gender, age and socio-economic group, May 2006
- Implications
- CHAID analysis underscores the relevance of affluence
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- Figure 61: CHAID analysis, May 2006
Industry Views
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- Aversion to risk
- A must-have product?
- The increasing importance of banks and building societies
- The Internet: an up-and-coming distribution channel?
- Challenges, present and future
The Future
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- Growth in confidence will be linked to stockmarket activity
- Fund supermarkets – the way of the future?
- An ageing population will see demand for collective investments increase
- Banks and building societies are poised to gain more market share
Forecast
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- Figure 62: Forecast of gross retail sales of unit trusts and OEICs, 2005-11
- The future looks promising
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- Figure 63: Illustration of forecast of gross retail sales of unit trusts and OEICs, 1996-11
- Factors used in the forecast
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