Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The retail savings and investment environment
- Savings ratio on an upward trend going into 2012
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- Figure 1: Quarterly changes in GDP and the savings ratio, 1998-2011
- Retail savings balances inch upwards
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- Figure 2: Retail savings balances outstanding*, 2002-11
- Value of ISA contributions continues to grow
- After period of strong growth, collective investment fund sales falter in late 2011
- Market factors
- Economic context
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- Figure 3: Monthly change in RPI and average weekly earnings, January 2008-December 2011
- Consumer context
- Many feeling the effect of high inflation and low wage growth
- Financial confidence
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- Figure 4: Financial confidence, November 2010-November 2011
- Keeping on top of financial commitments and savings top priorities for 2012
- Consumer ownership of savings and investments
- Level of savings
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- Figure 5: Level of investible assets, November 2011
- Product ownership
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- Figure 6: Saving and investment product ownership, November 2011
- Approach towards saving and investing
- Savings goals
- Achieving savings goals
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- Figure 7: Best way to achieve investment goals, November 2011
- Barriers to saving and investing
- Attitudes and behaviour towards saving and investing
- What we think
Issues in the Market
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- How will changing population dynamics affect the market?
- Why don’t British savers chase better returns on the stockmarket?
- How can long-term investing be made more appealing to young savers?
- How can providers encourage better savings habits?
- Is there a way to help those hampered by debt become savers?
Future Opportunities
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- Developing a savings lifestyle
- Focus on the fundamentals of long-term investing
Consumer Context
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- Key points
- Consumer confidence on a downward trajectory entering into 2012…
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- Figure 8: UK consumer confidence, January 1997-December 2011
- …but could end the year on the rise
- Two thirds view their current financial situation as healthy or OK
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- Figure 9: Current financial situation, November 2011
- Two fifths say their financial situation has worsened over last 12 months
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- Figure 10: Financial situation compared to 12 months ago, November 2011
- A year-end dip in financial confidence
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- Figure 11: Financial confidence, November 2010-November 2011
- Financial priorities for 2012 reflect a cautious and vigilant consumer
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- Figure 12: Financial priorities over the coming year, December 2011
- The influence of changing demographics and societal trends
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- Figure 13: Trends in the age structure of the UK population, 2006-16
Economic Context
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- Key points
- Savings ratio trending upward as consumers brace themselves for a difficult 2012
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- Figure 14: Quarterly changes in GDP and the savings ratio, 1998-2011
- Income squeeze will limit how much can be put aside
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- Figure 15: Monthly change in RPI and average weekly earnings, January 2008-December 2011
- Up and down markets will keep retail investors on edge
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- Figure 16: FTSE 100 and FTSE AllShare – closing values, January 2005-December 2011
- Low savings rates and high inflation will continue to make equities attractive...
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- Figure 17: Monthly changes in the rate of annual inflation* and Bank of England base rate – UK, December 2008-December 2011
- …but most will continue to prefer the safety of cash-based savings
Retail Savings and Investment Environment
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- Key points
- Retail savings balances outstanding rise by 1.8% in 2011
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- Figure 18: Retail savings balances outstanding*, 2002-11
- ISA contributions rose strongly during the 2010/11 tax year
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- Figure 19: Value of ISA sales, by type of ISA, 2005/06-2010/11
- Figure 20: Volume and value of ISA subscriptions, by type of ISA, 2005/06-2010/11
- Stocks and shares ISA growth will be less spectacular in 2011/12
- After a period of strong growth investment fund sales falter in late 2011
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- Figure 21: Retail sales of unit trusts and OEICs – UK-domiciled, 2005-11
Level of Savings
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- Key points
- Most adults have investible assets worth less than £5,000
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- Figure 22: Level of investible assets, November 2011
- Lifestage and the ability to save
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- Figure 23: Level of investible assets, by age, November 2011
- The affluent have more room to manoeuvre…
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- Figure 24: Level of investible assets, by socio-economic group, November 2011
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- Figure 25: Level of investible assets, by gross annual household income, November 2011
- …but even many of the well-off have little to no savings
Savings and Investment Product Ownership
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- Key points
- Eight in ten own a cash-based savings product
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- Figure 26: Saving and investment product ownership, November 2011
- Investing in equity-based products is a minority pursuit
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- Figure 27: Saving and investment product ownership, November 2011
- Product ownership levels rise with age and affluence
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- Figure 28: Saving and investment products currently owned, by gender and age, November 2011
- Planned savings activity highest among younger age groups
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- Figure 29: Saving and investment products (not owned) planning to buy over the next 12 months, by gender and age, November 2011
- Emphasising the benefits of youth
- The untapped potential of female investors
Savings Goals
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- Key points
- Unexpected events the top reason for saving
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- Figure 30: Consumer saving goals, November 2011
- Priorities shift along with lifestage
- Saving for retirement stalled by conflicting priorities
- Best ways to achieve savings goals – Cash and Property
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- Figure 31: Best way to achieve investment goals, November 2011
Barriers to Saving and Investing
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- Key points
- Half say they have no money left over after paying their bills
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- Figure 32: Consumer barriers to saving, November 2011
- Barriers vary in relevance according to demographic background
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- Figure 33: Consumer barriers to saving, demographic overview, November 2011
- Many facing financial difficulties are constricted by their debt
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- Figure 34: Consumer barriers to saving, by financial situation, November 2011
- Figure 35: Consumer barriers to saving, by financial situation over the next year, November 2011
- A savings programme designed for those in debt
Attitudes and Behaviour towards Saving and Investing
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- Key points
- An unwillingness to take risks getting in the way of better returns
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- Figure 36: Consumer attitudes and behaviour towards saving and investing, November 2011
- Too many associate investing with gambling
- Moving away from this notion
- Younger age groups show more favourable attitudes towards equities
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- Figure 37: Agreement statements about saving and investing, by gender and age, November 2011
- Those with money more likely to be tempted into equities
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- Figure 38: Agreement statements about saving and investing, by level of investible assets, November 2011
Saving and Investment Target Groups
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- Key points
- Target groups
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- Figure 39: Savings and investment target groups, November 2011
- Annoyed by low rates
- No cash to spare
- Favour safety
- Disposed to equities
- Target groups and investible assets
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- Figure 40: Level of investible assets, by target groups, November 2011
- Savings and investment product ownership
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- Figure 41: Financial product ownership, by target groups, November 2011
- Target group saving goals reveal the diversity of the overall market
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- Figure 42: Consumer saving goals, by target groups, November 2011
- Savings barriers reflect the financial health of each target group
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- Figure 43: Barriers to saving, by target groups, November 2011
- ‘Disposed to equities’ most bullish about their financial future
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- Figure 44: Financial situation over the next year, by target groups, November 2011
Appendix – Level of Savings
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- Figure 45: Level of investible assets, by demographics, November 2011
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Appendix – Saving and Investment Product Ownership
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- Figure 46: Saving and investment product ownership, by level of investible assets, November 2011
- Figure 47: Most popular financial product currently owned, by demographics, November 2011
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- Figure 48: Next most popular financial product I currently own, by demographics, November 2011
- Figure 49: Other financial product I currently own, by demographics, November 2011
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- Figure 50: Most popular financial product don't own but thinking of buying within the next 12 months, by demographics, November 2011
- Figure 51: Next most popular financial product don't own but thinking of buying within the next 12 months, by demographics, November 2011
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- Figure 52: Other financial product don't own but thinking of buying within the next 12 months, by demographics, November 2011
- Figure 53: Most popular financial product don't own and am not planning to, by demographics, November 2011
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- Figure 54: Next most popular financial product don't own and am not planning to, by demographics, November 2011
- Figure 55: Other financial product don't own and am not planning to, by demographics, November 2011
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Appendix – Savings Goals
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- Figure 56: Consumer saving goals, by financial situation, November 2011
- Figure 57: Consumer saving goals, by next year financial situation, November 2011
- Figure 58: Consumer saving goals, by gender and age, November 2011
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- Figure 59: Consumer saving goals, by socio-economic group, November 2011
- Figure 60: Consumer saving goals, by gross annual household income, November 2011
- Figure 61: Consumer saving goals, by demographics, November 2011
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- Figure 62: Consumer saving goals, by demographics (continued), November 2011
- Figure 63: Best way to achieve security for me and/or my family, by demographics, November 2011
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- Figure 64: Best way to achieve building long-term wealth, by demographics, November 2011
- Figure 65: Best way to achieve the highest possible returns, by demographics, November 2011
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- Figure 66: Best way to achieve generating regular income, by demographics, November 2011
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Appendix – Barriers to Saving and Investing
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- Figure 67: Consumer barriers to saving, by level of investible assets, November 2011
- Figure 68: Barriers to saving, by demographics, November 2011
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- Figure 69: Barriers to saving, by demographics (continued), November 2011
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Appendix – Attitudes and Behaviour towards Saving and Investing
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- Figure 70: Financial situation, by agreement statements about saving and investing, November 2011
- Figure 71: Financial situation over the next year, by agreement with statements about saving and investing, November 2011
- Figure 72: Disagreement with statements about saving and investing, by level of investible assets, November 2011
- Figure 73: Agreement with the statements ‘It's not worth saving at all with current interest rates and economic uncertainty’ and ‘Low interest rates on savings have motivated me to start thinking about investing in stocks and shares’, by demographics, November 2011
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- Figure 74: Agreement with the statements ‘Investing in shares is a total gamble’ and ‘I can't really afford to save or invest at the moment’, by demographics, November 2011
- Figure 75: Agreement with the statements ‘I don't like to take any risks with my savings/investments’ and ‘I've had to draw on my savings over the last year or so’, by demographics, November 2011
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Appendix – Saving and Investment Target Groups
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- Figure 76: Level of investible assets, by target groups, November 2011
- Figure 77: Consumer attitudes towards saving and investing, by target groups, November 2011
- Figure 78: Financial situation, by target groups, November 2011
- Figure 79: Comparison of financial situation against last year, by target groups, November 2011
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- Figure 80: Impact of economic downturn, by target groups, November 2011
- Figure 81: Consumer target groups, by demographics, November 2011
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