Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
- Non-CTF products are the most popular among parent savers
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- Figure 1: Preferred products for children's savings, October 2011
- Market factors
- Child Trust Funds are replaced by Junior ISAs
- Major banking groups have overlooked Junior ISAs
- Low interest rates and high inflation are eroding savings returns
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- Figure 2: UK inter-bank, three-month rate+ and selected UK bank rates*, January 2001-September 2011
- Childbirth rates have been on the up since 2005
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- Figure 3: Total number of newborn children in the UK, 2005-10
- Companies, brands and innovation
- Lloyds Banking Group is likely to have the largest share of children’s savings accounts
- Family Investments and The Children’s Mutual are the leading CTF providers
- Brand promotion
- Who’s innovating
- The consumer
- Saving on behalf of children
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- Figure 4: Saving on behalf of children, October 2011
- Amount saved on behalf of children
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- Figure 5: Amount saved, October 2011
- Reasons for saving on behalf of children
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- Figure 6: Reasons for saving on behalf of children, October 2011
- Awareness of CTF changes and Junior ISAs
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- Figure 7: Awareness of CTF changes, October 2011
- Figure 8: Junior ISA awareness, October 2011
- What we think
Issues in the Market
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- What impact will the closure of Child Trust Funds have on the market?
- Can the newly launched Junior ISAs invigorate the children’s savings and investing sector?
- How can product providers use technology to increase engagement with parents and children?
- Are high levels of inflation and low interest rates discouraging parents from saving for their children?
Future Opportunities
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- Engaging children through digitalisation
- Education-based products could appease parental concerns
Internal Market Environment
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- Key points
- Child Trust Funds close to new participants in January 2011…
- …replaced by Junior ISAs in November 2011
- The government will make a contribution for children in care
- Junior ISAs have been overlooked by the major banks
- Bank of England base rate remains at historical low of 0.5%
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- Figure 9: UK inter-bank, three-month rate+ and selected UK bank rates*, January 2001-September 2011
- UK savings ratio has fallen since 2009 but still significantly higher than pre-recession levels
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- Figure 10: UK savings ratio, 2005-11
Broader Marker Environment
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- Key points
- Equities tend to yield higher returns in the long term
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- Figure 11: Performance of the FTSE 100 index, January 2006-October 2011
- Annual childbirth rates have increased by 12% between 2005 and 2010
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- Figure 12: Total number of newborn children in the UK, 2005-10
- A large number of children that did not qualify for a CTF will be eligible for Junior ISAs
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- Figure 13: Number of children of each age in the UK, 2006-10
- Children are most likely to receive between £2 and £5 per week
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- Figure 14: Amount of money received by children per week, September 2011
- A fifth of kids save the money they receive and earn
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- Figure 15: How children spend their money, September 2011
SWOT Analysis
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- Figure 16: Savings products for children – SWOT analysis, 2011
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Who’s Innovating?
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- Key points
- Junior ISA offerings led by The Children’s Mutual and Family Investments
- Ethical funds lead the Junior ISA innovation race
- Family Investments and Bounty partnership launches Junior Bond
- Nationwide launches three new children’s savings products
- Child SIPPs available through Alliance Trust Savings
Market Size
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- Key points
- Non-CTF products are used by the majority of parents
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- Figure 17: Preferred products for children's savings, October 2011
- CTF voucher conversions set to fall in 2011
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- Figure 18: Number of CTF vouchers issued and accounts opened by parents, Q1 2005-Q2 2011
Market Share
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- Key points
- Family Investments and The Children’s Mutual are the two largest CTF providers
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- Figure 19: Number of organisations authorised to offer CTF accounts, 2009 and 2010
- Parallels can be made with the adult savings market
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- Figure 20: Savings account ownership, by provider, February 2011
Companies and Products
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- Family Investments
- The Children’s Mutual
- Lloyds Banking Group
- Nationwide
- NS&I (National Savings & Investments)
- Santander
- Barclays
- HSBC
- RBS
Brand Communication and Promotion
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- Key points
- Adspend falls by 22% in the year to August 2011
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- Figure 21: Topline advertising expenditure on savings and investment products for children, 2008/09-2010/11*
- Top ten advertisers account for the majority of adspend
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- Figure 22: Advertising expenditure on savings and investment products for children, by advertiser (top ten), 2008/09-2010/11*
- Press is the most popular method of advertising
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- Figure 23: Advertising expenditure on savings and investment products for children, by media type, 2008/09-2010/11*
- CTF advertising falls sharply in the last year
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- Figure 24: Topline advertising expenditure on Cash CTFs (Child Trust Fund), 2008/09-2010/11*
- Lack of government and industry campaigns about Junior ISAs
Channels to Market
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- Key points
- CTF market benefited from provider and distributor partnerships…
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- Figure 25: List of CTF distributors, by the provider whom they are tied to, December 2011
- ...and so could Junior ISAs
- Scope for online boost as internet usage increases
Saving on Behalf of Children
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- Key points
- Parents are the most likely to save for their children
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- Figure 26: Saving on behalf of children, October 2011
- Two thirds of parents try to save on at least a monthly basis…
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- Figure 27: Frequency of saving among parents, October 2011
- …and almost half of grandparents follow suit
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- Figure 28: Frequency of saving among grandparents, October 2011
- Affluence has a big impact on the ability to save for children
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- Figure 29: Saving on behalf of children, by socio-economic group and gross annual household income, October 2011
- Renting is restricting parents’ ability to save for children
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- Figure 30: Saving on behalf of children, by household tenure and size, October 2011
Amount Saved on Behalf of Children
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- Key points
- 35% of parents save less than £20 per month…
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- Figure 31: Amount saved, October 2011
- …and few will be able to take advantage of the increased CTF and Junior ISA contribution limit
- Over-45s are more likely to save larger amounts and on an ad-hoc basis
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- Figure 32: Amount saved, by gender and age, October 2011
- Flexible savers more likely to prioritise birthdays and Christmas
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- Figure 33: Frequency of saving among parents, by amount saved, October 2011
Product Ownership
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- Key points
- Children’s savings accounts are the most popular product in the market
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- Figure 34: Preferred products for children's savings, October 2011
- Confusion among parents when it comes to Child Trust Funds
- Junior ISAs could benefit from ISA popularity among the adult population
- Around 70% of parent savers use one type of product…
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- Figure 35: Preferred products for children’s savings, by the number of products owned, October 2011
- …while a quarter use two or more savings products
- Parent savers using CTFs contribute more often…
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- Figure 36: Frequency of saving among parents, by preferred products for children's savings, October 2011
- …and larger amounts than those using other products
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- Figure 37: Amount saved, by preferred products for children's savings, October 2011
Reasons for Saving on Behalf of Children
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- Key points
- Parents are mainly motivated to save for university/education costs and encouraging their children to save
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- Figure 38: Reasons for saving on behalf of children, October 2011
- The majority of parents want their children to spend savings in a certain way
- University/education costs are the main priority of higher-value savers
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- Figure 39: Reasons for saving on behalf of children, by amount saved, October 2011
- Parents with CTFs are more likely to have a long-term savings goal
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- Figure 40: Reasons for saving on behalf of children, by preferred products for children's savings, October 2011
Awareness of CTF Changes and Junior ISAs
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- Key points
- Parents are split on awareness about Child Trust Fund closure
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- Figure 41: Awareness of CTF changes, October 2011
- CTF contributors are much more aware about market changes
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- Figure 42: Awareness of CTF changes, by preferred products for children's savings, October 2011
- Awareness about Junior ISAs replacing CTFs is very low…
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- Figure 43: Junior ISA awareness, October 2011
- …and remains relatively unchanged by product ownership
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- Figure 44: Junior ISA awareness, by preferred products for children's savings, October 2011
- Link between awareness of Junior ISAs and closure of CTFs
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- Figure 45: Awareness of CTF changes, by junior ISA awareness, October 2011
Appendix – Saving on Behalf of Children
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- Figure 46: Saving on behalf of children, by demographics, October 2011
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Appendix – Amount Saved on Behalf of Children
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- Figure 47: Amount saved, by demographics, October 2011
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Appendix – Product Ownership
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- Figure 48: Preferred products for children's savings, by demographics, October 2011
- Figure 49: Repertoire of preferred products for children's savings, by demographics, October 2011
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Appendix – Reasons for Saving on Behalf of Children
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- Figure 50: Reasons for saving on behalf of children, by demographics, October 2011
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Appendix – Awareness of CTF Changes and Junior ISAs
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- Figure 51: Awareness of CTF changes, by demographics, October 2011
- Figure 52: Junior ISA awareness, by demographics, October 2011
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