Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Future Opportunities
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- Encouraging savers to break away from the herd
- Saving in order to deliver a sense of well being
Market in Brief
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- Recession led to increased focus on saving activity…
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- Figure 1: Saving ratio, Q1 2005-Q3 2010
- …but economic conditions are placing savers under pressure
- Stockmarket growth boosts investment market
- Investment sales and retail savings balances increase in 2010
- Consumers remain cautious about finances
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- Figure 2: Current financial situation, December 2010
- Cash-based savings lead the way
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- Figure 3: Saving and investment product ownership, December 2010
- Almost a third are without a financial safety net
- 50% of savers contribute on a monthly basis
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- Figure 4: Frequency of saving/investing, December 2010
- Around a quarter pay in a set amount each month
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- Figure 5: Approach to saving and investing, December 2010
- More than 40% are curbing saving activity to meet everyday expenses
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- Figure 6: Main barriers to saving and investing, December 2010
- Two fifths expect to increase amount saved during 2011
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- Figure 7: Attitudes towards saving and investing, December 2010
Economic Context
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- Key points
- Economic uncertainty has encouraged saving activity
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- Figure 8: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
- Saving activity slowed during the latter part of 2010
- Low interest rates undermine the incentive to save
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- Figure 9: Bank base rate and quoted household rates (%) for savings accounts, January 2000-November 2010
- Debate over the direction of interest rates
- Rising inflation bites into saving and investment returns
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- Figure 10: Average annual changes in the bank base rate, RPI and CPI – UK, 2000-10
- Pressure on wages will limit savings in 2011
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- Figure 11: Monthly change in RPI and average weekly earnings, 2005-10
- Stockmarket growth fuels investor confidence
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- Figure 12: FTSE 100 and FTSE All-Share indices, quarterly, November 2004-November 2010
- Paying off debt remains a financial priority
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- Figure 13: Outstanding lending to individuals, Q2 1993-Q3 2010
Consumer Context
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- Key points
- Consumer confidence remains subdued
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- Figure 14: Monthly, 3-monthly and 12-monthly UK consumer confidence indices, January 1997-December 2010
- Most people are managing to get by…
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- Figure 15: Current financial situation, December 2010
- …but only around a fifth regard their financial situation as healthy
- Two fifths believe their financial situation worsened in 2010
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- Figure 16: Financial situation compared to 12 months ago, December 2010
- Concerns about future prospects have risen
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- Figure 17: Trends in consumer sentiment about personal financial situation over the next 12 months, December 2009-December 2010
- Good financial intentions for 2011...
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- Figure 18: Financial priorities over the previous year and coming year, December 2010
- ...but there is still room for enjoyment as well
- Saving and investment activity is top financial priority
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- Figure 19: Savings, investment, borrowing and debt repayment – consumers’ expected activity, by quarter, Q3/Q4 2002-Q3/Q4 2010
- Age group changes will alter the shape of the market
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- Figure 20: Trends in the age structure of the UK population, 2005-15
- Changes for children’s saving products
SWOT Analysis
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- Figure 21: Consumers – Saving and Investing – SWOT analysis, 2011
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Retail Saving and Investment Environment
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- Key points
- Retail deposits show slight growth
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- Figure 22: Retail savings balances outstanding*, 2002-10
- Switching to ISAs, regular savings and fixed-rate bonds
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- Figure 23: Types of savings accounts held, 2006-10
- Appetite for equity-based savings continues to decline
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- Figure 24: Ownership of stocks and shares, government stock, unit trusts or investment trusts, 2003-10
- Investment sales decline but there are some growth areas
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- Figure 25: Volume of sales for selected investment products, 2005/06-2009/10
- Depositor protection increases to £85,000
Saving and Investment Ownership
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- Key points
- Note on consumer research
- There remains a clear preference for cash-based savings
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- Figure 26: Saving and investment product ownership, December 2010
- Almost 60% are opposed to taking risks with savings and investments
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- Figure 27: Responses to statement ‘I don’t like to take any risks with my savings/investments’, December 2010
- Financially secure are more likely to consider investment products
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- Figure 28: Saving and investment product ownership, by current financial situation, December 2010
- Most people support the concept of saving and investing
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- Figure 29: Repertoire of saving and investment account/product ownership, December 2010
- Product complexity increases along with number of products held
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- Figure 30: Saving and investment product ownership, by repertoire of saving and investment product ownership, December 2010
- Cross-ownership of saving and investment products is common
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- Figure 31: Cross-analysis of saving and investment product ownership, December 2010
- Multiple account ownership is also fairly common
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- Figure 32: Saving and investment product ownership, December 2010
Level of Savings and Investments Held
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- Key points
- More than a third have less than £500 in savings
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- Figure 33: Level of investible assets, December 2010
- Savings levels rise with age
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- Figure 34: Level of investible assets, by age, December 2010
- Wealthier people hold a wider range of products
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- Figure 35: Saving and investment product ownership, by amount of investible assets, December 2010
- Higher savers are more likely to spread the risk
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- Figure 36: Repertoire of saving and investment product ownership, by amount of investible assets, December 2010
- Financial wellbeing through saving and investing
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- Figure 37: Current financial situation, by saving and investment product ownership, December 2010
- Future confidence linked to level of savings and investments
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- Figure 38: Financial outlook over the next 12 months ago, by level of investible assets, December 2010
Frequency of Saving and Investing
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- Key points
- Almost 50% of savers add to their funds on a monthly basis
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- Figure 39: Frequency of saving/investing, December 2010
- A third are more infrequent savers
- For some saving accumulation is no longer a priority...
- ...but inactive savers may still have considerable investible wealth
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- Figure 40: Amount of investible assets, by frequency of saving/investing, December 2010
- Regular savers feel more financially secure…
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- Figure 41: Current financial situation, by frequency of saving/investing, December 2010
- …and are more confident about the future
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- Figure 42: Financial situation over the next year, by frequency of saving/investing, December 2010
Approach to Saving and Investing
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- Key points
- Only a quarter of savers pay in a set amount each month
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- Figure 43: Approach to saving and investing, December 2010
- Savings right at the top of priorities
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- Figure 44: What consumers choose to spend extra money on, December 2010
- Full-time employment and affluence underpins planned saving activity
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- Figure 45: Demographic overview of approach to saving and investing, December 2010
- Impromptu savers are more likely to save infrequently
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- Figure 46: Frequency of saving/investing, by approach to saving and investing, December 2010
- Accumulating a lump sum is linked to investment ownership
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- Figure 47: Saving and investment product ownership, by approach to saving and investing, December 2010
- Ad hoc savers are more likely to have lower level of savings
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- Figure 48: Amount of investible assets, by approach to saving and investing, December 2010
- Planned saving may help to deliver financial health
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- Figure 49: Approach to saving and investing, by current financial situation, December 2010
- Informal savers are less likely to be confident about the next 12 months
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- Figure 50: Financial situation over the next year, by approach to saving and investing, December 2010
Barriers to Saving and Investing
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- Key points
- Everyday expenses are the main barrier to saving activity
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- Figure 51: Main barriers to saving and investing, December 2010
- Balancing saving with low interest rates and debt repayment
- Current accounts may provide more attractive home for excess funds
- Obstacles to saving vary with age
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- Figure 52: Demographic overview of barriers to saving and investing, December 2010
- Low interest rates are primarily a concern for the financially assured
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- Figure 53: Current financial situation, by main barriers to saving and investing, December 2010
- Debt repayment is not just the domain of financial strugglers
- Helping people to budget could increase saving activity
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- Figure 54: Financial situation over the next year, by main barriers to saving and investing, December 2010
- Saving barriers are influenced by level of investible wealth
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- Figure 55: Amount of investible assets, by main barriers to saving and investing, December 2010
Attitudes Towards Saving and Investing
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- Key points
- Only 40% expect to increase saving over the next 12 months
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- Figure 56: Attitudes towards saving and investing, December 2010
- Under-35s are much more likely to plan to increase amount saved
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- Figure 57: Agreement with the statement ‘I am going to increase the amount I save in the next 12 months’, by age, December 2010
- Saving to provide security
- 50% have withdrawn from their savings over the last year
- Lower income groups and over-55s are more likely to make withdrawals
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- Figure 58: Proportion of people who agree they have withdrawn from savings over the last 12 months, by household income, December 2010
- Saving barriers will not necessarily prevent increased saving activity
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- Figure 59: Attitudes towards saving and investing, by main barriers to saving and investing, December 2010
- High-balance savers are the least likely to be planning to add to funds
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- Figure 60: Attitudes towards saving and investing, by level of investible assets, December 2010
- Appetite for risk is not influenced by current financial health
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- Figure 61: Agreement with attitudes towards saving and investing, by current financial situation, December 2010
- People looking to increase saving are more likely to save spare cash
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- Figure 62: Approach to saving and investing, by agreement with attitudes towards saving and investing, December 2010
Appendix – Consumer Context
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- Figure 63: Current financial situation, by demographics, December 2010
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- Figure 64: Financial situation compared to 12 months ago, by demographics, December 2010
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Appendix – Saving and Investment Ownership
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- Figure 65: Saving and investment product ownership, by demographics, December 2010
- Figure 66: Repertoire of saving and investment product ownership, by demographics, December 2010
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Appendix – Level of Savings and Investments Held
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- Figure 67: Amount of investible assets, by demographics, December 2010
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Appendix – Frequency of Saving and Investing
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- Figure 68: Frequency of saving/investing, by demographics, December 2010
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Appendix – Approach to Saving and Investing
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- Figure 69: Approach to saving and investing, by demographics, December 2010
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Appendix – Barriers to Saving and Investing
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- Figure 70: Main barriers to saving and investing, by demographics, December 2010
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Appendix – Attitudes Towards Saving and Investing
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- Figure 71: Agreement with attitudes towards saving and investing, by demographics, December 2010
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