Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
- Stockbroker revenues expected to increase
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- Figure 1: Forecast for total revenues by stockbroking firms, 2007-17
- XO account inactivity leads to closures, while the number of full-service portfolios grows
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- Figure 2: Number of accounts/portfolios held with execution-only and full service stockbrokers, 2007-11
- Portfolio segmentation
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- Figure 3: Number of execution-only accounts/portfolios, by type, 2011
- Trading activity
- Market factors
- Planned investment activity on the up
- Low interest rate environment could push more savers towards equities
- RDR starting to impact full-service stockbrokers
- Companies, brands and innovation
- Market share is dominated by a few providers
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- Figure 4: Share of total revenues, by the five largest firms in each sector, 2006-11
- Brand promotion
- Who’s innovating?
- The consumer
- Value of savings and Investments
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- Figure 5: Value of savings and investments, July 2012
- Investment portfolio
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- Figure 6: Savings and investment portfolio, July 2012
- Account ownership and share acquisitions
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- Figure 7: Sharedealing account ownership, July 2012
- Trading frequency
- Investment decisions
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- Figure 8: Investment decisions, July 2012
- Desirable features on XO services
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- Figure 9: Appealing features of an execution-only account, July 2012
- Investor sentiment
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- Figure 10: Savings and investment attitudes, July 2012
- What we think
Issues in the Market
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- How can sharedealing firms appeal boost engagement with non-investors?
- What are the prevailing consumer attitudes about sharedealing?
- Are current market conditions beneficial or detrimental for sharedealing?
- How many adults are considering investing in equity-based products in the next 12 months?
Trend Application
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- Rewarding potential investors
- Spreading the risk
- 2015: Old Gold
Market Drivers
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- Key points
- Planned investor activity up sharply
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- Figure 11: 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-Q3/Q4 2012
- Historically low interest rates could make shares a more appealing option
- Market volatility continues to present challenges and opportunities
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- Figure 12: FTSE 100 and FTSE All Share – daily index movements, August 2007-August 2012
- Consumer confidence down in the last year
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- Figure 13: GfK NOP Consumer Confidence Index, July 2006-July 2012
- Some signs that RDR is already having an impact on the market
- The rise of MiFID II and potential conflict with the RDR
- FSA targets rebate ban, which will encompass XO platforms
- Inflation figures starting to align with BoE target
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- Figure 14: Monthly change in RPI and average weekly earnings, 2006-July 2012
- Savings accounts and cash ISA are still the preferred method of saving
- ISA accounts dominated by cash component
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- Figure 15: Number of ISAs and amounts subscribed, segmented by type, 1999/2000-2011/12
- Minority of funds from stocks and shares ISAs invested in shares
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- Figure 16: Market value of funds held in stocks and shares ISAs, 2011
- Number and value of buy-to-let loans up in 2011
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- Figure 17: New buy-to-let mortgage business, 2001-11
SWOT Analysis
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- Figure 18: UK sharedealing market – SWOT analysis, 2012
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Who’s Innovating?
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- Key points
- Mobile app development continues to spearhead innovation
- Discount broker launches a low-cost Frequent Trader platform
- Virtual trading games could help to boost interaction and demystify equities
- CMC launches Chart Message Boards
- IG Index partners with Aurasma in new campaign to explain its pricing technology
Market Size and Forecast
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- Key points
- Stockbroking firms continued to grow revenues in 2011
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- Figure 19: Total revenues by stockbroking firms, 2007-12
- Commission earnings declined in 2011
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- Figure 20: Stockbroking revenue streams, by firm type, 2010 and 2011
- Inactivity has led to account closures and a decline in XO portfolios
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- Figure 21: Number of accounts/portfolios held with execution-only and full service stockbrokers, 2007-11
- Value of assets remained relatively stable during 2011
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- Figure 22: Number of accounts and the value of assets managed, by execution-only and full service stockbrokers, 2007-11
- Costs are significantly lower in proportion to revenues among XO brokers
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- Figure 23: Total costs as a proportion of total revenues, 2007-11
- Market forecast
- Stockbroking revenues expected to grow
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- Figure 24: Forecast for total revenues by stockbroking firms, 2007-17
- Figure 25: Forecast for total revenues by stockbroking firms, 2007-17
- Forecast methodology
- Fan chart explanation
Portfolio Segmentation
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- Key points
- Growth across most accounts, but first signs of RDR impact visible
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- Figure 26: Number of accounts/portfolios, by value band – nominee accounts only, 2011
- Large drop in the number of certificated accounts during 2011
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- Figure 27: Number of execution-only accounts/portfolios, by type, 2011
- Drop in active spreadbet and CFD accounts in Q4 2011
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- Figure 28: Number of active spread bet and CFD accounts held by execution-only stockbrokers, Q1 2006-Q4 2011
Trading Activity
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- Key points
- Trade transactions by stockbrokers fell by 4.1% in 2011
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- Figure 29: Number of stockbroker trades, by investment type, 2011
- Retail bargains fell by 5.8% in 2011
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- Figure 30: Historical bargain volumes* (shown on a quarterly basis), Q1 1988-Q3 2011
- Purchases continued to exceed sales in 2011
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- Figure 31: Bargain volumes*, by asset class, 2011
Market Share
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- Key points
- Top five XO brokers command 76% of total revenue
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- Figure 32: Share of total revenues, by the five largest firms in each sector, 2006-11
- Hargreaves Lansdown continues to dominate the market
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- Figure 33: Total revenues for selected stockbrokers, 2010 and 2011
Companies and Products
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- Key execution only firms:
- Barclays Stockbrokers
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- Figure 34: Key financial data for Barclays Stockbrokers Ltd, 2010 and 2011
- Halifax Share Dealing
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- Figure 35: Key financial data for Halifax Share Dealing, 2010 and 2011
- Hargreaves Lansdown
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- Figure 36: Key financial data for Hargreaves Lansdown, 2011 and 2012
- Selftrade
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- Figure 37: Key financial data for Selftrade, 2010 and 2011
- The Share Centre
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- Figure 38: Key financial data for The Share Centre, 2010 and 2011
- TD Direct Investing
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- Figure 39: Key financial data for TD Direct Investing Ltd, 2010 and 2011
- Key spread betting firms:
- Capital Spreads
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- Figure 40: Key financial data for London Capital Group Plc, 2010 and 2011
- City Index/Finspreads
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- Figure 41: Key financial data for City Index Ltd, 2010 and 2011
- CMC Markets
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- Figure 42: Key financial data for CMC Markets Plc, 2011 and 2012
- IG Index
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- Figure 43: Key financial data for IG Index Ltd, 2010 and 2011
Brand Communication and Promotion
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- Key points
- Adspend on investment products and services down by a fifth
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- Figure 44: Total advertising expenditure on investment products and services, by product category, 2007/08-2011/12
- Top five advertisers account for almost 60% of stockbroker/sharedealing adspend
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- Figure 45: Top ten advertisers – stockbrokers and sharedealing only, 2008/09-2011/12
- Popularity of internet-based advertising continues to increase
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- Figure 46: Total advertising by stockbrokers and sharedealers only, by media type, 2008/09-2011/12
Channels to Market
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- Key points
- Buying and selling shares
- Share ownership can be from passive or active acquisitions
- Over half of full-service broker client funds under discretionary management
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- Figure 47: Full-service stockbroker assets, by management channel, 2008-11
- Online trading dominates the XO segment
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- Figure 48: Online trades as a percentage of execution-only trades, 2007-11
Value of Savings and Investments
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- Key points
- The majority of consumers have some savings and investments
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- Figure 49: Value of savings and investments, July 2012
- Older consumers are more likely to have higher value portfolios
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- Figure 50: Value of savings and investments, by age, July 2012
- Household income dictates the value of savings and investments…
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- Figure 51: Value of savings and investments, by gross annual household income, July 2012
- …and home ownership also has an impact
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- Figure 52: Value of savings and investments, by housing situation, July 2012
Investment Portfolio
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- Key points
- Risk-free and familiar savings products are most popular…
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- Figure 53: Savings and investment portfolio, July 2012
- …with only a quarter of adults owning equity-based investments
- Affluence, age and gender continues to influence ownership of equity-based investments
- Ownership is higher among men, but interest is similar between the sexes
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- Figure 54: Savings and investing portfolio, by gender, July 2012
- High-net worth clients most likely to have equity-based investments
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- Figure 55: Savings and investment portfolio, by value of savings and investments, July 2012
Account Ownership and Share Acquisitions
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- Key points
- Around 9% of UK adults have a sharedealing account
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- Figure 56: Sharedealing account ownership, July 2012
- Sharedealing accounts popular among 16-34-year-old equity investors
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- Figure 57: Sharedealing account ownership, by age, July 2012
- Share acquisitions driven by self-trading
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- Figure 58: Share acquisitions, July 2012
- Accountholders more likely to have self-purchased investments
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- Figure 59: Share acquisitions, by sharedealing account ownership, July 2012
Trading Frequency
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- Key points
- Almost a third of equity-based investors trade on a monthly basis
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- Figure 60: Sharedealing frequency, July 2012
- Gender has an impact on sharedealing and investment activity
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- Figure 61: Sharedealing frequency, by gender, July 2012
- 16-34-year-olds are most likely to trade frequently
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- Figure 62: Sharedealing frequency, by age, July 2012
- Trading activity higher among sharedealing account holders
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- Figure 63: Sharedealing frequency, by sharedealing account ownership, July 2012
Investment Decisions
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- Key points
- A minority seek advice when making savings and investment decisions
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- Figure 64: Investment decisions, July 2012
- High-net worth investors are more likely to use professional advice
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- Figure 65: Investment decisions, by value of savings and investments, July 2012
- Likelihood to obtain professional advice varies between products
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- Figure 66: Investment decisions, by savings and investment portfolio, July 2012
Desirable Features on Execution-Only Services
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- Key points
- Low costs are most important features of an XO share-dealing service
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- Figure 67: Appealing features of an execution-only account, July 2012
- Costs are even more important to current investors
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- Figure 68: Appealing features of an execution-only account, by savings and investment portfolio, July 2012
- Infrequent traders more likely to prioritise low costs and no inactivity charges
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- Figure 69: Appealing features of an execution-only account, by sharedealing frequency, July 2012
Investor Sentiment
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- Key points
- Current economic environment making extra savings difficult
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- Figure 70: Savings and investment attitudes, July 2012
- Perceived product complexity and risk is a barrier for some consumers
- Women are more risk-averse and less influenced by low interest rates
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- Figure 71: Savings and investment attitudes, by gender and age, July 2012
- Affluent investors are more confident in sharedealing
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- Figure 72: Savings and investment attitudes, by gross annual household income, July 2012
- Even equity-based investors are tentative about sharedealing
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- Figure 73: Savings and investment attitudes, by sharedealing frequency, July 2012
Appendix – Market Size and Forecast
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- Figure 74: Best and worst case forecast for total revenues by stockbroking firms, 2012-17
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Appendix – Value of Savings and Investments
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- Figure 75: Value of savings and investments, by demographics, July 2012
- Figure 76: Value of savings and investments, by demographics, July 2012
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Appendix – Investment Portfolio
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- Figure 77: Savings account/Cash ISA ownership/intentions, by demographics, July 2012
- Figure 78: Company pension ownership/intentions, by demographics, July 2012
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- Figure 79: NS&I product ownership/intentions, by demographics, July 2012
- Figure 80: Personal pension ownership/intentions, by demographics, July 2012
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- Figure 81: Equity-based investments ownership/intentions, by demographics, July 2012
- Figure 82: Individual company shares ownership/intentions, by demographics, July 2012
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- Figure 83: With-profits, unit-linked, money market, distribution or guaranteed investment bond ownership/intentions, by demographics, July 2012
- Figure 84: Investment trust ownership/intentions, by demographics, July 2012
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- Figure 85: Unit trust/OEIC ownership/intentions, by demographics, July 2012
- Figure 86: Investment property ownership/intentions, by demographics, July 2012
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- Figure 87: SIPP ownership/intentions, by demographics, July 2012
- Figure 88: Financial spread-betting account ownership/intentions, by demographics, July 2012
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- Figure 89: ETF (exchange-traded fund) ownership/intentions, by demographics, July 2012
- Figure 90: Other savings or investments ownership/intentions, by demographics, July 2012
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Appendix – Account Ownership and Share Acquisitions
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- Figure 91: Sharedealing account ownership, by demographics, July 2012
- Figure 92: Circumstances of share ownership, by demographics, July 2012
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Appendix – Trading Frequency
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- Figure 93: Sharedealing frequency, by demographics, July 2012
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Appendix – Investment Decisions
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- Figure 94: Investment decisions, by demographics, July 2012
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Appendix – Desirable Features on Execution-Only Services
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- Figure 95: Most popular appealing features of an execution-only account, by demographics, July 2012
- Figure 96: Appealing features of an execution-only account, by demographics, July 2012
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Appendix – Investor Sentiment
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- Figure 97: Agreement with the statement ‘I find it difficult to add to my savings or investments at the moment’, by demographics, July 2012
- Figure 98: Agreement with the statement ‘The current environment is too volatile for buying/selling shares’, by demographics, July 2012
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- Figure 99: Agreement with the statement ‘Investing in shares is too risky’, by demographics, July 2012
- Figure 100: Agreement with the statement ‘Investing in shares is too complicated’, by demographics, July 2012
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- Figure 101: Agreement with the statement ‘It is necessary to take on some risk to get decent returns’, by demographics, July 2012
- Figure 102: Agreement with the statement ‘Low interest rates have made me more interested in sharedealing’, by demographics, July 2012
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