Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The retail savings and investment environment
- Persistent uncertainty ensures the savings ratio remains elevated
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- Figure 1: Quarterly changes in GDP* and the savings ratio**, 1998-Q3 2012
- Retail savings balances rise to £1.2 trillion
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- Figure 2: Retail savings balances outstanding, by sector, 2003-12^
- Overall ISA contribution levels flat in 2011/12
- Net sales of investment funds more than halved during the past three years
- Market factors
- The prolonged squeeze on incomes has decreased but pressure remains
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- Figure 3: Monthly change in RPI and average weekly earnings, January 2009-October 2012
- Consumer context – Britons are more upbeat than a year ago…
- …but still cautious about the next year
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- Figure 4: Financial confidence, November 2011 vs. November 2012
- Saving still a top priority
- Ownership of savings and investments
- More than four in five Britons own a cash-based savings product
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- Figure 5: Savings and investment product ownership, November 2012
- Investible asset levels mostly concentrated at values below £30,000
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- Figure 6: Level of investible assets*, November 2012
- Savings and investment goals
- Protection against the unexpected is the top reason for saving
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- Figure 7: Savings and investment goals, November 2012
- Just under half are confident about achieving their savings goals
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- Figure 8: Confidence in achieving investment goals, November 2012
- Approach towards saving and investing
- Most consumers show at least casual engagement in saving and investing
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- Figure 9: Consumer engagement in saving and investing, November 2012
- Majority of savers prefer to take a cautious approach to saving and investing
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- Figure 10: Agreement with statements about approaches to saving and investing, November 2012
- Savings attitudes reflect the cautious mood of consumers
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- Figure 11: Agreement with statements about saving and investing, November 2012
- What we think
Issues in the Market
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- How can providers foster a greater sense of loyalty among savers?
- Can anything be done to help those strapped for cash and time?
- What can be done to make investing more appealing to young people?
- How can more savers be encouraged to think longer term?
Trend Application
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- ‘Bad times’ are actually ‘good times’ to invest
- Differentiation through personalisation
- 2015: Access Anything, Anywhere
Consumer Context
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- Key points
- Consumer confidence drops going into 2013
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- Figure 12: GfK NOP Consumer Confidence Index, January 2007-December 2012
- More people now describe their finances as healthy or OK
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- Figure 13: Current financial situation, November 2011 vs. November 2012
- Two fifths say their financial situation is about the same as a year ago
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- Figure 14: Financial situation compared to 12 months ago, November 2011 vs. November 2012
- Financial confidence levels remain steady
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- Figure 15: Financial confidence, November 2011 vs. November 2012
- Saving continues to be a top priority
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- Figure 16: Trends in what extra money is spent on, November 2011 vs. November 2012
Economic Context
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- Key points
- Lingering economic uncertainty props up the savings ratio
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- Figure 17: Quarterly changes in GDP* and the savings ratio**, 1998-Q3 2012
- The long-term squeeze on income has decreased but pressure remains
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- Figure 18: Monthly change in RPI and average weekly earnings, January 2009-October 2012
- Unemployment levels have improved but remain high
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- Figure 19: UK unemployment rate, seasonally adjusted, January 2007-October 2012
- Stockmarket performance tends to shape consumer interest in equities
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- Figure 20: FTSE 100 and FTSE All-Share – daily index movements, January 2008-December 2012
- Low interest rates mean savings accounts are underperforming
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- Figure 21: Average annual changes in the Bank of England base rate, CPI and RPI – UK, January 2010-November 2012
Retail Savings and Investment Environment
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- Key points
- British savers now hold £1.2 trillion in retail savings
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- Figure 22: Retail savings balances outstanding, by sector, 2003-12^
- 2011/12 tax year ISA contributions stall
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- Figure 23: Value of ISA sales, by type of ISA, 2006/07-2011/12
- Figure 24: Volume and value of ISA subscriptions, by type of ISA, 2006/07-2011/12
- Investment fund sales stagnate
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- Figure 25: Retail sales of unit trusts and OEICs – UK-domiciled, 2007-12
Savings and Investment Product Ownership
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- Key points
- Cash-based saving is king…
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- Figure 26: Savings and investment product ownership, November 2012
- …and equity and property investing are niche activities
- Pension ownership levels are poor but set to rise
- 70% say they will never consider buying an equity-based product
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- Figure 27: Savings and investment product ownership, November 2012
- Taking advantage of interest in investing not trying to create it
- Planned savings and investment activity highest for men and under-35s
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- Figure 28: Savings and investment products not owned but thinking of buying within the next 12 months, by gender and age, November 2012
- Planned activity is well above average among the wealthy
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- Figure 29: Savings and investment products not owned but thinking of buying within the next 12 months, by household income, November 2012
Value of Investible Assets
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- Key points
- Majority own savings at values below £30,000
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- Figure 30: Level of investible assets*, November 2012
- Range of products owned rises along with investible assets
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- Figure 31: Savings and investment product ownership (currently owned or not owned but thinking of buying within next 12 months), by value of investible assets*, November 2012
- Investible asset levels tend to rise after age 45
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- Figure 32: Level of investible assets*, by age, November 2012
- Higher-income households tend to save more
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- Figure 33: Level of investible assets*, by gross annual household income, November 2012
Savings and Investment Goals
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- Key points
- Protection against the impact of unforeseen events is the top savings goal
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- Figure 34: Savings and investment goals, November 2012
- Half of adults have just one savings goal
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- Figure 35: Savings and investment goals, by number of savings and investment goals, November 2012
- Savings and investment goals are largely age-specific
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- Figure 36: Savings and investment goals, by age, November 2012
- Saving for retirement not a top priority until later in life
- Priorities tend to shift as wealth is accumulated
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- Figure 37: Savings and investment goals, by value of investible assets*, November 2012
- The luxury to think long term is not as expensive as it used to be
Confidence in Achieving Savings Goals
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- Key points
- Nearly half are confident about achieving their savings goals
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- Figure 38: Confidence in achieving savings and investment goals, November 2012
- 45-54-year-olds are the least confident
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- Figure 39: Confidence in achieving savings and investment goals, by age, November 2012
- Savings goals can influence confidence levels
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- Figure 40: Confidence in achieving savings and investment goals, by savings and investment goals, November 2012
- Figure 41: Confidence in achieving savings and investment goals, by savings and investment goals, November 2012 (continued)
- Those who are confident are more likely to own equity-based products
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- Figure 42: Savings and investment product ownership, by confidence in achieving savings and investment goals, November 2012
- A conservatively managed portfolio of equities can outperform cash
Engagement in Saving and Investing
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- Key points
- Most savers are closely following the economy and return on savings
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- Figure 43: Consumer engagement in saving and investing, November 2012
- Overall level of engagement tends to increase with age and wealth
- 25-34-year-olds most likely to be following the stock market
- Time for a new approach to marketing investment products and services
Approach to Saving and Investing
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- Key points
- Most prefer to take a cautious approach to saving and investing
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- Figure 44: Agreement with statements about approaches to saving and investing, November 2012
- Majority of savers acknowledge the importance of FSCS protection
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- Figure 45: Level of agreement about importance of the FSCS when choosing savings/investment provider, November 2012
- Financial crisis a key factor
- The internet has helped Britons become savvier savers
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- Figure 46: Level of agreement with statements about the internet and saving and investing, November 2012
- Move to online savings product management still in its early stages
- Just over half are prepared to move to a new provider for a better deal
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- Figure 47: Level of agreement about preparedness to move savings and investments every year to get best deals/rates, November 2012
- Keep savings rates competitive or fall behind those that do
- Few are prepared to deal with the vagaries of equity-based investing
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- Figure 48: Level of agreement with statements about willingness to lock savings away for five plus years and willingness to take on risk to achieve higher returns on savings, November 2012
- Encouraging signs from younger age groups
Attitudes towards Saving and Investing
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- Key points
- Savings attitudes reflect the guarded mood of consumers
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- Figure 49: Agreement with statements about saving and investing, November 2012
- Pessimism about the economy is causing many to think more about saving…
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- Figure 50: Level of agreement with statements about saving and investing, November 2012
- …but for many repaying debt continues to be a top priority
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- Figure 51: Level of agreement with statements about saving and investing, November 2012
- Many young people hampered by a lack of spare cash and time
- Freeing up time and money via partnerships with ‘cashback’ websites
- Low savings rates don’t necessarily deter people from saving
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- Figure 52: Level of agreement with statements about saving and investing, November 2012
- Less than a fifth would prefer to just spend their money
- Over a third agree that stockmarket investing is mostly about luck
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- Figure 53: Level of agreement with statements about saving and investing, November 2012
- Extolling the value of a long-term investment horizon
Appendix – Savings and Investment Product Ownership
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- Figure 54: Savings and investment products currently owned, by demographics, November 2012
- Figure 55: Savings and investment products currently owned, by demographics, November 2012 (continued)
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- Figure 56: Savings and investment products currently owned, by demographics, November 2012 (continued)
- Figure 57: Savings and investment products not owned but thinking of buying within the next 12 months, by demographics, November 2012
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- Figure 58: Savings and investment products not owned but thinking of buying within the next 12 months, by demographics, November 2012 (continued)
- Figure 59: Savings and investment products not owned but thinking of buying within the next 12 months, by demographics, November 2012 (continued)
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- Figure 60: Savings and investment products not owned and not planning to buy, by demographics, November 2012
- Figure 61: Savings and investment products not owned and not planning to buy, by demographics, November 2012 (continued)
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- Figure 62: Savings and investment products not owned and not planning to buy, by demographics, November 2012 (continued)
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Appendix – Value of Investible Assets
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- Figure 63: Value of investible assets, by demographics, November 2012
- Figure 64: Value of investible assets, by demographics, November 2012 (continued)
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- Figure 65: Value of investible assets, by demographics, November 2012 (continued)
- Figure 66: Savings and investment product ownership, by value of investible assets*, November 2012
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Appendix – Savings and Investment Goals
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- Figure 67: Savings and investment goals, by demographics, November 2012
- Figure 68: Savings and investment goals, by demographics, November 2012 (continued)
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- Figure 69: Repertoire for savings and investment goals, by demographics, November 2012
- Figure 70: Savings and investment product ownership, by savings and investment goals, November 2012
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- Figure 71: Savings and investment product ownership, by savings and investment goals, November 2012 (continued)
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Appendix – Confidence in Achieving Savings Goals
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- Figure 72: Confidence in achieving investment goals, by demographics, November 2012
- Figure 73: Confidence in achieving savings and investment goals, by value of investible assets, November 2012
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- Figure 74: Savings and investment product ownership, by confidence in achieving investment goals, November 2012
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Appendix – Engagement in Saving and Investing
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- Figure 75: Consumer engagement in saving and investing – The rate of return of my savings and investments, by demographics, November 2012
- Figure 76: Consumer engagement in saving and investing – Savings rates offered by other high street banks/building societies, by demographics, November 2012
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- Figure 77: Consumer engagement in saving and investing – The performance of the stock market, by demographics, November 2012
- Figure 78: Consumer engagement in saving and investing – The rate of inflation, by demographics, November 2012
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- Figure 79: Consumer engagement in saving and investing – The Bank of England base rate, by demographics, November 2012
- Figure 80: Consumer engagement in saving and investing – The overall economy, by demographics, November 2012
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- Figure 81: Consumer engagement in saving and investing, November 2012
- Figure 82: Consumer engagement in saving and investing, by savings and investment product ownership, November 2012
- Figure 83: Consumer engagement in saving and investing, by value of investible assets*, November 2012
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Appendix – Approach to Saving and Investing
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- Figure 84: Agreement with the statements ‘It’s important to make sure that your money is fully protected by the Financial Services Compensation Scheme before choosing a savings/investment provider’ and ‘The internet is a valuable resource to use when researching new savings and investment products’, by demographics, November 2012
- Figure 85: Agreement with the statements ‘The internet has made it easier for me to manage my savings and investment products’ and ‘I would be prepared to move my savings and investments every year to get the best deals/rates’, by demographics, November 2012
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- Figure 86: Agreement with the statements ‘I would be willing to lock away my savings for five years or more’ and ‘I would be willing to take on some risk in order to achieve higher returns with my savings’, by demographics, November 2012
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Appendix – Attitudes towards Saving and Investing
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- Figure 87: Agreement with the statements ‘Economic uncertainty has made me think more about saving and investing’ and ‘Repaying my debts is more of a priority for me than saving’, by demographics, November 2012
- Figure 88: Agreement with the statements ‘I don't think I have enough money to make saving worthwhile right now’ and ‘Stockmarket investing is more about luck than skill’, by demographics, November 2012
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- Figure 89: Agreement with the statements ‘It’s not worth saving when interest rates are low’ and ‘It’s difficult to find the time to think about saving and investing’, by demographics, November 2012
- Figure 90: Agreement with the statement ‘I’d rather spend my money than worry about saving’, by demographics, November 2012
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