Table of Contents
Issues in the Market
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- Key issues covered in the report
- Product definitions
- Individual savings account (ISA)
- Fixed-interest securities
- Investment bonds
- Structured products
- Collective investments
- Abbreviations
Future Opportunities
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- Life after debt
- From a nation of borrowers to a nation of savers?
- The rise of behavioural economics
- Understanding the irrational consumer
Market in Brief
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- Engagement in savings and investment
- Product ownership and wealth
- Attitudes towards risk, saving and investing
- Investor behaviour
- Attitudes towards financial advice
- Sources of financial advice
- Mixed growth in product sales
- 2010 – an uncertain year in prospect
- Market leaders
- Distribution trends
Market Sentiment – A Year On
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- Key points
- That was the year that was
- 2010 – the road to recovery?
- Low interest rates help support hard-pushed borrowers…
- … but savers suffer
- Recovery in the property and equity markets
- Regulation plays a role in the investment market
Economic and Investment Climate
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- Key points
- Economic and investment overview
- Key economic issues
- Financial position of households
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- Figure 1: A tale of two recessions – the financial position of households June 1990-March 1992; April 2008-December 2009*
- Fewer people struggling with their debts
- Reducing the debt burden a consumer priority
- A tough savings climate for income seekers…
- … leading some to invest in structured products
- Shifts in investment choices
- Surging stock markets
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- Figure 2: FTSE 100 and FTSE All-Share indices, quarterly, March 2000-December 2009
- Stockmarket outlook less promising
- Despite falling property markets, people still like property investment
Savings and Politics
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- Key points
- Good prospects for savings and investment businesses
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- Figure 3: Consumers’ intended savings, investment, borrowing and debt repayment, 2002-09*
- Improvement in both saving and spending climate
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- Figure 4: Spending and saving climate, 2000-09
- The changing demographic structure of the UK
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- Figure 5: UK population, by age groups, 1999, 2009 and 2017 (
- From family to retirement
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- Figure 6: UK population, by lifestage, 1999-2013
- More young people are saving
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- Figure 7: Savings and investment intentions, under-30s, December 2006-09
- Savings policy (or lack of it) set to become a key election issue
- Government action and the savings culture
- Significant government-led product development
- Wealth has been created, but so has greater inequality
- Shaping the future savings landscape…
- … while maintaining profitability
- The regulatory burden on intermediaries
- Company stability and opaque product offerings a consumer concern
- More people turn to Financial DIY although many will need advice
Consumer and Investor Sentiment
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- Key points
- Confidence recovering in 2009 and up in January 2010
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- Figure 8: UK consumer confidence index, January 1988-2010
- Savings and investment expected activity back in vogue
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- Figure 9: Consumers’ expected savings/investment activity, 2002-09
- Intended cash savings activity improving despite low interest rates
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- Figure 10: Intended saving activities, Q3/Q4 2002-Q4 2009/Q1 2010
- Strong rise in life & pension intentions
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- Figure 11: Expected Life & Pensions purchase activity, Q3/Q4 2002-Q4 2008/Q1 2010
- Weak investor sentiment towards equities – a preference for bonds
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- Figure 12: Expected investment activity, Q3/Q4 2002-Q4 2008/Q1 2010*
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- Figure 13: Expected investment activity, High earners vs All adults, December 2009
- Slump in mortgage intentions; property purchase intentions weakening
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- Figure 14: Expected mortgage and property purchase activity, Q3/Q4 2002-Q4 2008/Q1 2010
- Recovery in financial wellbeing
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- Figure 15: Financial wellbeing, 2001-10
- Savings head the list of consumers’ changing priorities
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- Figure 16: Financial priorities over the past year and the coming year, November 2009
Retail Investment Market Size
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- Key points
- Regulated retail investment product sales
- Investment bonds accounted for three fifths of investment sales
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- Figure 17: Number of new regulated investment sales, by product type year to March 2009
Sector Performance
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- Key points
- The value of ISA funds grew by 24% in 2009…
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- Figure 18: Value of funds held in the two ISA components, 2005-09
- … while contributions were up 8% on 2007/08
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- Figure 19: New ISA business, by asset class, 2000/01-2007/08
- Equities regain some appeal as market picks up
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- Figure 20: Proportion of adults holding investments in stocks and shares or unit trusts, either individually or jointly with another person, 1985, 1989, 1996-2009
- The changing face of shareholding
- Falling dividends hit income investors
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- Figure 21: Dividend payout performance, UK listed companies, 2009
- Surge in unit trust/OEIC net retail sales
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- Figure 22: UK domiciled unit trust/oeic net retail sales, 2000-09
- Signs of a defensive approach to asset allocation
- A herd mentality?
- Value of corporate bond funds up sharply
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- Figure 23: Total assets held in UK corporate bond sector and all bond sector, 2005-09
- Investment bond appeals wanes
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- Figure 24: Total number of new single-premium investment bond contracts and value of new premiums 2004-09
- Offshore bonds losing to UK providers
- Demand for guaranteed products
Key Investment Product Providers
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- Key points
- Investment bonds
- Leading providers
- Fund managers
- Invesco Perpetual keeps top spot
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- Figure 25: Top 20 unit trust and OEIC fund managers, by retail funds under management, December 2009
- Leading players highlight the importance of ‘star’ managers
- Fidelity maintains leading ISA fund provider leadership
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- Figure 26: Top ten ISA Managers by funds under management*, December 2009
Product Distribution
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- Key points
- Around 50% of investment products and ISAs sold through banks and building societies
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- Figure 27: Investment sales, by channel, 2008/09
- Intermediaries key sales channel for unit trusts/OEICs
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- Figure 28: Distribution channels in the Unit Trust/OEIC sector, gross retail sales, 2005-09
- Fund supermarkets ahead in the ISA fund market
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- Figure 29: Gross retail sales of ISA funds by distribution channel, 2005-09
- Co-funds, Skandia and Funds Network leading funds platforms
- Bringing down the cost of direct investment
- IFAs’ domination of investment bond distribution waning
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- Figure 30: Investment bond distribution mix, by product category, based on total new premiums, 2009*
Consumers’ Product and Asset Ownership
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- Key points
- Rise in net worth of households in 2009
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- Figure 31: Household net worth, 2004-09*
- 9% fall in financial assets in 2008
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- Figure 32: Household financial net worth, by asset type, 2004-08
- Cash still leads the way – and ISA allowances still going to waste
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- Figure 33: Saving and investment products own separately or jointly with partner, December 2009
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- Figure 34: Saving and investment products own separately or jointly with partner, by household income and age group, December 2009
- Scotland shows the way with savings
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- Figure 35: Saving and investment products own separately or jointly with partner, by region, GB, December 2009
- Nearly half of adults have one or no savings products
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- Figure 36: Numbers of savings and investment products types held, December 2009
- Around 16% of the population have investible assets in excess of £50,000
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- Figure 37: Overview of value of investible assets (excluding pensions and main residence), December 2009
- The benefits of broadening product ownership
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- Figure 38: Number of savings and investment products owned, by value of investible assets (excluding pensions and property investment), December 2008
The Consumer – Attitudes Towards Risk
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- Key points
- Consumers may have to take on more risk
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- Figure 39: Attitudes towards risk tolerance, December 2009
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- Figure 40: Attitudes towards risk tolerance, by household income and age groups, December 2009
- Education is crucial
- Little willingness to ‘gamble’ with limited savings
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- Figure 41: Attitudes towards risk tolerance by total value of saving and investment (nets), December 2009
The Consumer – Reasons for Saving
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- Key points
- Why save or invest?
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- Figure 42: Main reasons for saving and investing, December 2009
- The impact of lifestage on saving motivations
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- Figure 43: Main reasons for saving and investing, by lifestage, December 2009
- For a minority, investment becomes a hobby
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- Figure 44: Main reasons for saving and investing, by repertoire of saving and investment products own separately or jointly with partner, December 2009
The Consumer – Sources of Saving and Investment Advice
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- Key points
- Friends, family and work colleagues main sources of advice
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- Figure 45: Sources of saving and investment advice used in the past, December 2008 and December 2009
- Two main groups of professionally advised and non-advised groups among savers/investors
- Professionally advised groups, profiles:
- Non-professionally advised groups, profiles:
- Banks used as main source of advice for all but the wealthy…
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- Figure 46: Sources used for advice on saving and investment in the past by total value of saving and investment (nets), December 2009
- … and are crucial among moderate savers
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- Figure 47: Sources of advice, by number of savings and investment product types held, December 2009
The Consumer – Attitudes towards Savings and Investment Advice
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- Key points
- Nearly half of consumers do their own research – few believe the worst of the financial crisis is over
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- Figure 48: Statements on sources of financial advice savings and investment products, December 2009
- Troubled times leading to a desire for expert advice…
- … but an unwillingness to pay for this advice
- Education + affluence = engagement
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- Figure 49: Most popular statements on sources of financial advice savings and investment products by gender and socio-demographic group, December 2009
- Are younger savers more prepared to take control of their finances?
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- Figure 50: Most popular statements on sources of financial advice savings and investment products, by household income and age, December 2009
- Super-savers prepared to pay for advice…
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- Figure 51: Most popular statements on sources of financial advice savings and investment products, by number of savings & investment products held, December 2009
- … as are those with sizeable sums to invest
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- Figure 52: Statements on sources of financial advice savings and investment products, by total value of saving and investment, December 2009
- Commission bias fears greatest among affluent 35-44-year-olds
- … and among those relying on workplace advice
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- Figure 53: Agreement with statements about savings and investment advice, by sources of advice used, December 2008
- Greatest scepticism about financial advisers among saver-investors
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- Figure 54: Number of savings and investment product types held by Q4
Appendix – Consumers’ Product and Asset Ownership
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- Figure 55: Most popular saving and investment products own seprately or jointly with partner, by demographics, December 2009
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- Figure 56: Next most popular saving and investment products own seprately or jointly with partner by demographics, December 2009 (continued)
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- Figure 57: Other saving and investment products own seprately or jointly with partner, by demographics, December 2009 (continued)
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- Figure 58: Most popular repertoire of saving and investment products own seprately or jointly with partner, by demographics, December 2009
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- Figure 59: Next most popular repertoire of saving and investment products own seprately or jointly with partner, by demographics, December 2009 (continued)
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- Figure 60: Most popular total value of saving and investment (nets), by demographics, December 2009
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- Figure 61: Next most popular total value of saving and investment (nets), by demographics, December 2009 (continued)
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Appendix – The Consumer – Attitudes Towards Risk
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- Figure 62: Attitudes towards risk tolerance, by demographics, December 2009
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Appendix – The Consumer – Reasons for Saving
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- Figure 63: Most popular main reasons for saving and investing, by demographics, December 2009
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- Figure 64: Next most popular main reasons for saving and investing, by demographics, December 2009 (continued)
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Appendix – The Consumer – Sources of Savings and Investment Advice
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- Figure 65: Most popular sources used for advice on saving and investment in the past, by demographics, December 2009
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- Figure 66: Next most popular sources used for advice on saving and investment in the past, by demographics, December 2009 (continued)
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- Figure 67: Other sources used for advice on saving and investment in the past, by demographics, December 2009 (continued)
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Appendix – The Consumer – Attitudes Towards Savings and Investment Advice
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- Figure 68: Most popular statements on sources of financial advice savings and investment products, by demographics, December 2009
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- Figure 69: Next most popular statements on sources of financial advice savings and investment products, by demographics, December 2009 (continued)
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