Table of Contents
Issues in the Market
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- Key issues
- Product background
- Abbreviations
Insights and Opportunities
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- Promoting straightforward ISAs
- Making equity-ISAs more attractive
- From students to savers
- Increasing online sales channels
- Understanding the incentives to save
Market in Brief
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- ISA sales witness strong growth in 2007/08
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- Figure 1: Number of ISA accounts subscribed to, by cash and stocks and shares components, 1999/2000 to 2007/08
- Cash ISA subscriptions increase by 11%
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- Figure 2: Amounts subscribed to ISA accounts, by cash and stocks and shares components, 1999-2000 to 2007/08
- New ISA regulations address issues of complexity
- Economic slowdown provides a challenge for the ISA market
- Falling consumer confidence reduces intentions to save
- HBOS and Nationwide dominate cash ISA market share…
- … while Fidelity tops list of ISA fund managers
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- Figure 3: Market share for ISA fund managers, by value of funds under management for IMA members, May 2008
- Fund platforms are now dominant channel
- Key consumer findings
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- Figure 4: Ownership of ISAs and other savings and investment products, April 2008
- Consumer awareness continues to pose challenge
- A third of ISA savers are looking to the long-term
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- Figure 5: Overview of ISA holder behaviour, April 2008
Fast Forward Trends
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- Trend: Totophobia
- A fear of finance
- A step forward
- Fear lurks under the surface
- Low appetite for financial risk
- Trend: Transparency
- Transparency is integral in becoming trusted…
- … and is increasing outside financial services
- Some brands are well-placed
- Improving transparency in the ISA sector
Internal Market Environment
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- Key points
- New simplified ISA regime ushered in
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- Figure 6: Illustration of annual investment limits, to 5th April 2008
- Figure 7: Illustration of annual investment limits, from 5th April 2008
- ISA changes at a glance
- Implications of new regulations
- Credit squeeze could lower demand for ISAs…
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- Figure 8: Intended cash based-activities Q3/Q4 2002-Q4/Q1 2008*
- …but savings rates boosted by demand for deposits
- Investor sentiment remains weak
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- Figure 9: Intended purchase and sales of equities, Q3/Q4 2002-Q4/Q1 2008
- Fallout from Northern Rock
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- Figure 10: Agreement with statements relating to Northern Rock, by gender, January 2008
- Covered to £50,000?
- Other regulatory changes/updates
- Retail distribution review
- National money guidance service
- Savings Gateway scheme
Broader Market Environment
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- Key points
- Economic slowdown
- Consumer confidence weakens
- Bank rate cuts reduce appeal of savings products…
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- Figure 11: Bank of England base rate and RPI, November 1990-March 2008
- … while inflation continues to erode savings
- Pressure on household finances
- Increased volatility will weaken demand for equity investments
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- Figure 12: FTSE 100 and FTSE all-share indices – daily movements, January 2000-April 2008
- Equity ISAs – peaks and troughs
- Demographic factors are positive for future of ISA market
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- Figure 13: Number of basic and higher-rate taxpayers, 1998/99-2008/09
- 7% growth in over-45s expected by 2013
Competitive Context
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- Key points
- ISAs as wrappers
- ISAs within the wider savings and investment market
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- Figure 14: Ownership of ISA and other savings and investment products, April 2008
- The extent of the ISA gap
- ISAs and pensions
- The IHT challenge
- Is property losing its appeal?
- Household debt continues to rise
Strengths and Weaknesses in the Market
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- Figure 15: Strengths and weaknesses in the ISA market
- Strengths in the ISA market
- Weaknesses in the ISA market
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Who’s Innovating?
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- Key points
- Price is the key driver
- An ISA for life
- ISA Cash Park
- Development of protected funds
Trade Perspective
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- Participating companies
- Mixed response for new ISA regulations
- New regulations have a limited impact
- Raising awareness of new regulations
- ISAs in a time of economic uncertainty
- Improving ISA uptake
- Outlook for the market
Market Size and Forecast
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- Key points
- ISA sales soar in 2007/08
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- Figure 16: Number of ISA accounts subscribed to, by cash and stocks and shares components,
- …but stocks and shares ISAs more liable to fluctuations
- Stockmarket uncertainties hit stocks and shares ISA sales
- Cash subscriptions increase by 11% in last tax year
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- Figure 17: Amounts subscribed to ISA accounts, by cash and stocks and shares components, 1999/2000 to 2007/08
- Equity-based ISA subscriptions have increased in recent years…
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- Figure 18: Average subscriptions for mini cash ISA, mini stocks and shares ISAs and maxi ISAs,
- … but cash ISA subscriptions remain relatively flat
- Forecast
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- Figure 19: Cash ISA, new business value, at current prices, forecast, 2008-13
- … but stocks and shares ISAs to decline in short-term
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- Figure 20: Stocks and shares ISA, new business value, at current prices, forecast, 2008-13
- Factors used in the forecast
Business in Force
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- Key points
- More than £200 billion held in ISAs
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- Figure 21: Value of funds held in each ISA component as of 5th April, 2001-07
- OEICs make up 45% of stocks and shares ISA market
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- Figure 22: Comparison of proportion of funds held in stocks and shares ISA component, 2001 & 2007
- Cautious managed funds most popular in net terms
- PEPs to increase the size of the ISA market by £79 billion
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- Figure 23: Market value of funds in PEPs as at 5th April, by breakdown of qualifying investment, 2002-07
Market Share
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- Key points
- Halifax and Nationwide lead cash ISA rankings
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- Figure 24: Provider share of mini cash ISA customer base, April 2008
- Attributes of leading providers
- Building societies punch above weight in ISA market
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- Figure 25: Share of all retail balances, by type of provider, January 2008
- Figure 26: Share of cash ISA balances, by type of provider, January 2008
- Leading ISA fund managers
- Fidelity and Legal & General lead the way
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- Figure 27: Market share for ISA fund managers, by value of funds under management for IMA members, May 2008
- Fidelity exceeds £7.5 billion in ISA funds
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- Figure 28: Top 15 ISA fund managers, by value of funds under management, 2005-08
Companies and Products
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- Almost three out of ten cash ISA products are fixed rate
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- Figure 29: Overview of types of cash ISA products available, June 2008
- Building societies tend to offer better rates
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- Figure 30: Average month end cash ISA interest rates for banks and building societies, Apr 99-Dec 07
- Risk is key factor for equity ISAs
- Company profiles – Cash ISA providers
- Halifax/HBOS Group
- Nationwide
- Leading fund managers
- Fidelity International
- Legal and General
- Fund supermarkets – Key players
Brand Elements
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- Brand Map
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- Figure 31: Attitudes and usage of ISA brands, May 2008
- National savings and investments
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 32: Attitudes towards the NS&I brand, May 2008
- Northern Rock
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 33: Attitudes towards the Northern Rock brand, May 2008
- Nationwide
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 34: Attitudes towards the Nationwide brand, May 2008
- Halifax
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 35: Attitudes towards the Halifax brand, May 2008
- Brand qualities of ISA brands
- NS&I seen as most authoritative and reassuring brand
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- Figure 36: Personalities of various ISA brands, May 2008
- Experience of ISA brands
- More than a fifth have experienced Halifax brand for ISAs
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- Figure 37: Consumer usage of various ISA brands, May 2008
- Brand intentions for ISA brands
- Almost half would never consider Northern Rock
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- Figure 38: Consideration of various ISA brands, May 2008
- Brand momentum for ISA brands
- Halifax and Nationwide are gaining most ground
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- Figure 39: Momentum of various ISA brands, May 2008
- Brand motivation for ISA brands
- NS&I brand has strongest association with savings/ISA products
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- Figure 40: Motivation for choosing various ISA brands, May 2008
- Brand satisfaction for ISA brands
- Nationwide shows most excellent satisfaction
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- Figure 41: Satisfaction with various ISA brands, May 2008
- Brand commitment to ISA brands
- Nationwide is most likely to be recommended
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- Figure 42: Commitment to various ISA brands, May 2008
- Round up
Brand Communication and Promotion
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- Key points
- New regulations push up ISA adspend by 20%
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- Figure 43: Total advertising expenditure on ISAs and PEPs, by product category, 2003/04-2007/08
- ISA season accounts for almost 70% of annual adspend
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- Figure 44: Analysis of monthly ISA expenditure, 2007/08
- Advertisers embrace a variety of media
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- Figure 45: Proportion distribution adspend on ISAs and PEPs, by main media types, 2003/04-2007/08
- Retail banks top ISA adspend in 2007/08
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- Figure 46: Top 20 ISA & PEP advertisers 2005/06-2007-08
Channels to Market
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- Key points
- Cash ISAs sold by direct channels
- Only a fifth of cash ISA products can be operated online
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- Figure 47: Channels available for cash ISA transactions, June 2008
- Some 79% of stocks and shares ISA sales receive advice
- IMA Unit Trust/OEIC ISA distribution data
- Fund supermarkets alter landscape of ISA distribution
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- Figure 48: Gross retail sales of unit trust and OEIC ISAs, by distribution channel, 2000-07
- Fund supermarkets now dominate market
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- Figure 49: Proportional of gross retail unit trust and OEIC ISA sales, by channel, 2000-07
The Consumer – ISA Product Ownership
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- Key points
- Survey background
- Almost a third of adults hold a cash ISA
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- Figure 50: Ownership of ISA and other savings and investment products, April 2008
- UK savers remain risk averse
- The ISA gap – only four in ten savers have a cash ISA
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- Figure 51: Cross-analysis of product ownership, April 2008
- 44% of people with two savings products have a cash ISA
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- Figure 52: repertoire analysis of products owned, May 2008
- Over-44s represent key group for ISA providers
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- Figure 53: Ownership of ISAs and other savings/investment products, by gender, age, lifestage and marital status, April 2008
- Over-35s are looking to the long-term future
- Half of all ABs hold a cash ISA
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- Figure 54: Ownership of ISAs and other savings/investment products, by socio-economic group, gross annual household income, working status, household tenure, April 2008
- Considerable regional variation in ISA ownership
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- Figure 55: Ownership of ISAs and other savings/investment products, by TV region, technology users, newspaper readership, supermarket used, April 2008
- Almost a quarter of ISA holders are over 65
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- Figure 56: Profile of ISA and other savings and investment holders, by gender, age, socio-economic and TV region, April 2008
The Consumer – Cash ISA Providers
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- Key points
- Two-thirds of cash ISAs are held with banks
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- Figure 57: Cash ISA provider, by type of institution, April 2008
- More affluent ISA savers are attracted to building societies
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- Figure 58: Typical demographic profiles of bank and building society ISA customers, April 2008
- Region influences choice of institution
- Building society ISA holders have more diversified products
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- Figure 59: Type of institution where cash ISA is held, by savings and investment products held, April 2008
The Consumer – Attitudes and Savings Behaviour
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- Key points
- Less than a fifth of ISA holders are aware of new regulations
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- Figure 60: Attitudes towards ISA products, April 2008
- 55-64-year-olds are the most aware of ISA changes
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- Figure 61: Responses to ‘I’d read about changes to ISA regulations in this tax year’, April 2008
- People aged 55-64 more likely to be positive about ISAs
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- Figure 62: Key demographic profiles for key ISA attitudinal statements, April 2008
- Adults under 44 are the least likely to understand ISAs
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- Figure 63: Responses to ‘I don’t really understand ISAs’, by age group, among non-ISA holders, April 2008
- Inertia is barrier for younger adults
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- Figure 64: Responses to ‘I would like to save in an ISA, but haven’t got around to it’, by age group, among non-ISA holders, April 2008
- Cash ISA holders are the strongest ISA advocates
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- Figure 65: Attitudes towards ISA products, by owners of different types of saving/investment product, April 2008
- Building society ISA savers are better informed but cautious
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- Figure 66: Attitudes towards ISA products, by owners of type of institution where cash ISA is held, April 2008
- A third of ISA savers are looking to the long term
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- Figure 67: Overview of ISA holder behaviour, April 2008
- Men are more likely to be committed savers
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- Figure 68: ISA holder behaviour by gender, and age, April 2008
- A fifth of ABs use Internet to search for best deals
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- Figure 69: ISA holder behaviour, by socio-economic group, April 2008
- NS&I customers are committed ISA savers
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- Figure 70: ISA holder behaviour, by ownership of different savings and investment products, April 2008
- Building society savers looking at long term
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- Figure 71: ISA holder behaviour, by institution where cash ISA is held, April 2008
The Consumer – ISA Targeting Opportunities
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- Key points
- Target group analysis
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- Figure 72: Target groups for ISAs, April 2008
- ISA supporters – committed vs cautious
- ‘Strong ISA advocates’ – positive and well-informed (13% of adults)
- Demographic profile
- Marketing message
- ‘Cautious ISA supporters’ – positive but less engaged (24% of adults)
- Demographic profile
- Marketing message
- ‘Instant access savers’ – overriding need for instant access and flexibility (12% of adults)
- Demographic profile
- Marketing message
- ‘Need Advice’ – lacks understanding of ISAs (23% of adults)
- Demographic profile
- Marketing message
- Disengaged – simply not interested (28%)
- Demographic profile
- Marketing message
- Target groups reveal potential to expand market
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- Figure 73: Ownership of ISA products among target groups, April 2008
Appendix – Broader Market Environment
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- Figure 74: Size of the UK population, by age group, 1993-2013
- Figure 75: Distribution of the UK population aged 15+ by socio-economic group, 1993-2013
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Appendix – The Consumer – Product Providers
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- Figure 76: Type of institution where cash ISA is held, by gender, age, lifestage and marital status, April 2008
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- Figure 77: Type of institution where cash ISA is held, by socio economic group, gross annual household income, working status, household tenure, April 2008
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- Figure 78: Type of institution where cash ISA is held, by TV region, technology users, newspaper readership, supermarket used, April 2008
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Appendix – Attitudes and Savings Behaviour
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- Figure 79: Attitudes towards ISA products, by gender, age, lifestage and marital status, April 2008
- Figure 80: Attitudes towards ISA products, by socio economic group, gross annual household income, working status, household tenure, April 2008
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- Figure 81: Attitudes towards ISA products, by TV region, technology users, newspaper readership, supermarket used, April 2008
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Appendix – ISA Targeting Opportunities
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- Figure 82: Target group analysis, by product ownership, April 2008
- Figure 83: Demographic breakdown of target group analysis, April 2008
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