Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
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- Figure 1: Total revenues by stockbroking firms, 2006-16
- Execution-only account growth continues but many accounts inactive in 2010
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- Figure 2: Number of accounts/portfolios held with execution-only and full-service stockbrokers, 2006-10
- Portfolio segmentation
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- Figure 3: Number of execution-only accounts/portfolios, by type, 2010
- Trading activity
- Market factors
- Economic uncertainty persists
- Markets expected to remain highly volatile
- Weaker retail trading expected
- Demand for DMA expected to be limited
- Key regulatory developments
- Companies, brands and innovation
- Market share dominated by a few
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- Figure 4: Share of total revenues by the five largest firms in each sector, 2006-10
- Adspend on online sharedealing doubles
- Market innovations
- The consumer
- Investment holdings
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- Figure 5: Financial product holdings, July 2011
- Planned investment activity
- Preferred investment channels
- What investors look for in a share-dealing service
- Investor sentiment
- Interest in self-directed investing
- What we think
Issues in the Market
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- How can share-dealing services be made more appealing to women?
- What do experienced investors most want from a sharedealing service?
- How can providers make trading in volatile markets less intimidating?
- How can providers better support customers in times of distress?
Future Opportunities
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- It’s cool to invest like a girl
- Differentiating from the competition in real-time
Internal Market Environment
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- Key points
- Weak outlook for retail investor activity
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- Figure 6: Intended purchases of shares and equity-based unit trusts, government and corporate bonds and bond-based unit trusts*, sales of equities and unit trusts and FTSE 100**, Q3/Q4 2002-Q2/Q3 2011
- Interest in DMA access expected to be limited among retail investors
- Key regulatory developments
- RDR could push more into self-directed investing
- EU’s MiFID review could supersede some aspects of RDR
- FSA still considering a ban on platform rebates
- Government launches review of UK equity markets
- Taxing the rich
- Summary of tax changes
Broader Market Environment
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- Key points
- Slow economic growth ahead
- Unstable stockmarket performance testing investor fortitude
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- Figure 7: FTSE 100 and FTSE All Share – daily index movements, August 2006-August 2011
- Consumer confidence remains suppressed
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- Figure 8: GfK NOP Consumer Confidence Index, July 2005-July 2011
- Opportunities to strengthen customer relationships
- Inflationary pressures expected to let up in 2012
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- Figure 9: Monthly change in RPI and average weekly earnings, 2005-August 2011
- Low interest rates will continue to make shares attractive
Competitive Context
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- Key points
- Cash is king
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- Figure 10: Ownership of savings and investments, July 2011
- Majority of new ISA funds go into the cash component
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- Figure 11: Number of ISAs and amounts subscribed, segmented by type, 1999/2000-2010/11
- 15% of funds held in stocks and shares ISAs are invested in shares
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- Figure 12: Market value of funds held in stocks and shares ISAs, 2010 (provisional)
- Collective investments the key competitor for retail investor funds
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- Figure 13: Volume of regulated retail sales of investment trusts and unit trust/OEICs, 2006-10
- ETFs traded like shares
- New BTL loans increase by 10% in 2010
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- Figure 14: New buy-to-let mortgage business, 2001-10
Swot
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- Figure 15: UK sharedealing market – SWOT analysis, 2011
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Who’s Innovating?
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- Key points
- The rise of mobile share-dealing trading services
- Barclays
- Halifax Share Dealing
- TD Waterhouse
- Hargreaves Lansdown
- Traders’ club from CMC Markets
- The Barclays SmartWoman initiative
- International Trader from Barclays Stockbrokers
- Shareprice.co.uk offers free real-time share prices to iPad traders
- Selftrade offers free data package for frequent traders
Market Size and Forecast
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- Key points
- Overall revenue at stockbroking firms rises by 10% in 2010
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- Figure 16: Total revenues by stockbroking firms, 2006-10
- Commissions play a less important role in 2010…
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- Figure 17: Stockbroking revenue streams, by firm type, 2009 and 2010
- …but should regain relevance in 2011’s highly volatile market
- There are now over 4.5 million execution-only accounts in the UK
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- Figure 18: Number of accounts/portfolios held with execution-only and full-service stockbrokers, 2006-10
- Majority of execution-only accounts were inactive in 2010
- Assets held with execution-only firms rose by more than a third in 2010
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- Figure 19: Number of accounts and the value of assets managed, by execution-only and full-service stockbrokers, 2006-10
- Pre-tax profit margins remain healthy
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- Figure 20: Total costs as a proportion of total revenues, 2006-10
- Five-year forecast
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- Figure 21: Total revenues by stockbroking firms, 2006-16
- Continued revenue growth expected
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- Figure 22: Total revenues by stockbroking firms, 2006-16
- Although only representing a very Forecast methodology
- Fan chart explanation
Portfolio Segmentation
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- Key points
- Strong growth in execution-only accounts worth between £50,000 and £1 million
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- Figure 23: Number of accounts/portfolios, by value band – nominee accounts only, 2010
- Number of execution-only SIPP accounts up by nearly a fifth
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- Figure 24: Number of execution-only accounts/portfolios, by type, 2010
- Continued growth in derivative accounts expected
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- Figure 25: Number of active spread bet and CFD accounts held by execution-only stockbrokers, Q1 2006-Q4 2010
Trading Activity
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- Key points
- Trade volumes fall back from their 2009 highs
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- Figure 26: Number of stockbroker trades, by investment type, 2006-10
- Private client bargains decline by 4.6% in 2010
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- Figure 27: Historical bargain volumes* (shown on a quarterly basis), Q1 1998-Q3 2010
- Purchases exceeded sales in 2010
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- Figure 28: Bargain volumes*, by asset class, 2010
Market Share
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- Key points
- Market share increasingly top heavy
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- Figure 29: Share of total revenues, by the five largest firms in each sector, 2006-10
- Revenue growth continues for most top brokerages
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- Figure 30: Total revenues for selected stockbrokers, 2009 and 2010
Companies and Products
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- Key execution-only brokers
- Barclays Stockbrokers
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- Figure 31: Key financial data for Barclays Stockbrokers Ltd, 2009 and 2010
- Halifax Share Dealing
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- Figure 32: Key financial data for Halifax Share Dealing Ltd, 2009 and 2010
- Hargreaves Lansdown
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- Figure 33: Key financial data for Hargreaves Lansdown plc Group, 2010 and 2011
- Selftrade
- The Share Centre
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- Figure 34: Key financial data for The Share Centre Ltd, 2009 and 2010
- TD Waterhouse
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- Figure 35: Key financial data for TD Waterhouse Investor Services (Europe) Ltd, 2009 and 2010
- Key spread-betting firms
- Capital Spreads
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- Figure 36: Key financial data for London Capital Group Holdings plc, 2009 and 2010
- City Index
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- Figure 37: Key financial data for City Index Ltd, 2009 and 2010
- CMC Markets
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- Figure 38: Key financial data for CMC Markets plc, 2010 and 2011
- IG Index
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- Figure 39: Key financial data for IG Index Ltd, 2009 and 2010
Brand Communication and Promotion
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- Key points
- Online sharedealing adspend doubles in the past year
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- Figure 40: Total advertising expenditure on investment products and services, by product category, 2007-11
- IG Markets, Selftrade and CMC Markets account for two fifths of adspend
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- Figure 41: Top ten advertisers – stockbrokers and sharedealers only, 2009-11
- Internet-based advertising accounts for more than half of all adspend
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- Figure 42: Total advertising by stockbrokers and sharedealers only, by media type, 2009-11
- Note about NMR data
Channels to Market
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- Key points
- Buying and selling shares
- Other ways shares can be acquired
- Most full-service broker client funds under discretionary management
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- Figure 43: Full-service stockbroker assets, by management channel, 2007-10
- 80% of execution-only trades now conducted online
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- Figure 44: Online trades as a percentage of execution-only trades, 2007-10
Investment Holdings
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- Key points
- Most people still steer clear of equity-based investments...
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- Figure 45: Financial product holdings, July 2011
- ...while less than one in ten have a sharedealing account
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- Figure 46: Financial product ownership, July 2011
- Some interest in more exotic trading instruments
- Equity-based investments yet to break out of their traditional market
- Building a female-friendly account
Planned Investment Activity
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- Key points
- Three in ten expect to increase their equity holdings
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- Figure 47: Savings and investment plans, by product, July 2011
- Still scope to grow revenues for share-dealing services
- A grown-up portfolio, and a chance to play at being a day trader
- Planned activity highest among the young
Preferred Investment Channels
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- Key points
- The high street still dominates
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- Figure 48: Channels used to buy shares and other types of investments, July 2011
- IFAs are failing to turn transactions into relationships
- Broker clients make up in quality what they lack in quantity
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- Figure 49: Holdings of equity-based investments, by channels used to buy investments, July 2011
- A contrast between young and old
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- Figure 50: Use of key channels to buy shares and other types of investments, by gender, age and household income, July 2011
What Investors Look For in a Share-dealing Service
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- Key points
- No frills – just low charges
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- Figure 51: Features that investors look for in a share-dealing service, July 2011
- Price becomes even more important to key target groups
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- Figure 52: Features that investors look for in a share-dealing service, by equity ownership, July 2011
- Making it easy for people to shift their investments online
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- Figure 53: Features that investors look for in a share-dealing service, by channels used to purchase investments, July 2011
Investor Sentiment
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- Key points
- Low interest rates can’t overcome a lack of spare cash
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- Figure 54: Investor sentiment, July 2011
- Higher earners looking to maximise their savings income
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- Figure 55: Agreement with the statements on savings and investment sentiment, by gender, age, socio-economic group and household income, July 2011
- Huge scope to capitalise on low interest rates
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- Figure 56: Financial product ownership, by agreement with savings and investment sentiment, July 2011
Interest in Self-Directed Investing
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- Key points
- Time and complexity mitigate against stock picking
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- Figure 57: Approach towards self-directed investment, July 2011
- Older people more prepared to deal with investment complications
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- Figure 58: Agreement with statements on savings and investment sentiment, by gender, age, socio-economic group and household income, July 2011
- Further potential to expand the market
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- Figure 59: Financial product ownership, by approach towards self-directed investment, July 2011
Investor Segmentation
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- Key points
- A split between traders and builders
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- Figure 60: Key trading segments, July 2011
- Do investors want a helping hand?
- Or do they just want to be left to get on with it?
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- Figure 61: Key features in an online share-dealing service, by trading segments, July 2011
- Not all investors are equal
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- Figure 62: Investment ownership, by trading segments, July 2011
- Signs that Builders and Traders are ready to dip their toes in the market
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- Figure 63: Investment intentions among non-product holders, by trading segments, July 2011
- Where do the Builders buy their shares?
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- Figure 64: Channels used to buy investments, by trading segments, July 2011
- And to whom will the Traders turn in the future?
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- Figure 65: Channels that non-users would consider for future investment purchases, by trading segments, July 2011
- Traders confirm their interest in self-directed investment
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- Figure 66: Savings and investment sentiment, by target groups, July 2011
Appendix – Market Size and Forecast
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- Figure 67: Total revenues by stockbroking firms, 2009-16
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Appendix – Investment Holdings
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- Figure 68: Financial product ownership, July 2011
- Figure 69: Most commonly-held savings and investment products, by demographics, July 2011
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- Figure 70: Next commonly-held savings and investment products, by demographics, July 2011
- Figure 71: Other commonly-held savings and investment products, by demographics, July 2011
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- Figure 72: Least commonly-held savings and investment products, by demographics, July 2011
- Figure 73: Most popular products that respondents don’t currently own but are considering arranging over the course of the next year, by demographics, July 2011
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- Figure 74: Next products that respondents don’t currently own but are considering arranging over the course of the next year, by demographics, July 2011
- Figure 75: Other products that respondents don’t currently own but are considering arranging over the course of the next year, by demographics, July 2011
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- Figure 76: Least popular products that respondents don’t currently own but are considering arranging over the course of the next year, by demographics, July 2011
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Appendix – Planned Investment Activity
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- Figure 77: Savings and investment plans, by product, July 2011
- Figure 78: Equity-based plans, by demographics, July 2011
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- Figure 79: Stocks and shares ISA, by demographics, July 2011
- Figure 80: Individual company shares, by demographics, July 2011
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Appendix – Preferred Investment Channels
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- Figure 81: Channels used to buy shares and other types of investments, July 2011
- Figure 82: Most popular regular, occasional and one-time users of channels to buy shares and other types of investments, by demographics, July 2011
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- Figure 83: Next most popular regular, occasional and one-time users of channels to buy shares and other types of investments, by demographics, July 2011
- Figure 84: Financial product ownership, by most popular channels used by regular, occasional or one-time users to buy shares and other types of investments, July 2011
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- Figure 85: Financial product ownership, by next most popular channels used by regular, occasional or one-time users to buy shares and other types of investments, July 2011
- Figure 86: Financial product ownership, by most popular channels used by regular, occasional or one-time users to buy shares and other types of investments, July 2011
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- Figure 87: Financial product ownership, by next most popular channels used by regular, occasional or one-time users to buy shares and other types of investments, July 2011
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Appendix – What Investors Look For In A Share-dealing Service
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- Figure 88: Desired share dealing features, July 2011
- Figure 89: Most popular desired sharedealing features, by demographics, July 2011
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- Figure 90: Next most popular desired sharedealing features, by demographics, July 2011
- Figure 91: Other desired sharedealing features, by demographics, July 2011
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- Figure 92: Desired share dealing features, by most popular current financial product ownership, July 2011
- Figure 93: Desired share dealing features, by next most popular current financial product ownership, July 2011
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- Figure 94: Desired share dealing features, by other current financial product ownership, July 2011
- Figure 95: Desired share dealing features, by least popular current financial product ownership, July 2011
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- Figure 96: Desired share dealing features, by most popular channels used by regular, occasional or one-time users to buy shares and other types of investments
- Figure 97: Desired share dealing features, by next most popular channels used by regular, occasional or one-time users to buy shares and other types of investments
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Appendix – Investor Sentiment and Interest in Self-Directed Investing
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- Figure 98: Savings and investment sentiment, July 2011
- Figure 99: Agreement with the statements on savings and investment sentiment, by demographics, July 2011
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- Figure 100: Disagreement with the statements on savings and investment sentiment, by demographics, July 2011
- Figure 101: Financial product ownership, by agreement with savings and investment sentiment, July 2011
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- Figure 102: Financial product ownership, by disagreement with savings and investment sentiment, July 2011
- Figure 103: Financial product ownership, by agreement with savings and investment sentiment, July 2011
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- Figure 104: Financial product ownership, by disagreement with savings and investment sentiment, July 2011
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Appendix – Investor Segmentation
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- Figure 105: Target groups, by demographics, July 2011
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