Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- Consumers and the appetite for direct platforms
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- Figure 1: Attitudes towards financial advice, June 2013
- Market factors
- Consumers still feeling the effects of the financial crisis
- Strong performance of financial markets has made equities attractive to consumers
- The internet is driving direct platforms into the mainstream
- Companies, brands and innovation
- Adspend lower in 2012/13 as the industry waited for the RDR
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- Figure 2: Advertising expenditure by selected platform providers, 2008/09 – 2012/13
- The consumer
- Some 65% of consumers have savings and investments under £30,000
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- Figure 3: Value of savings and investments, June 2013
- Preferred approach to investment decisions
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- Figure 4: Attitudes towards financial advice, June 2013
- Attitudes towards the concept of discretionary fund management
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- Figure 5: Attitudes towards the concept of discretionary fund management, June 2013
- Amount that consumers expect to pay in charges when investing
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- Figure 6: Amount that consumers expect to pay in charges, June 2013
- Considerations when choosing a company to invest with
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- Figure 7: Considerations when choosing a company to invest with, June 2013
- How much choice consumers want in picking their investments
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- Figure 8: Appeal of selected online investment options, June 2013
- What we think
Issues in the Market
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- Can direct DIY platforms help less affluent consumers to invest their money?
- Can the RDR gap be filled by direct discretionary platforms?
- How important is brand in choosing an investment provider?
- Will large financial institutions want to join the direct platform market?
Trend Application
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- Simplifying choice
- Take control of your finances
- Mintel’s Futures: Generation Next
Market Drivers
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- Key points
- Household incomes remain under pressure
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- Figure 9: Trends in average earnings (excluding bonuses) versus retail price inflation, 2007-13
- Global markets have performed well over the past year
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- Figure 10: Nikkei 225, FTSE 100, S&P 100, Eurofirst 300 – adjusted closing values index, January 2003-June 2013
- Consumers have little interest in the performance of the stock market
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- Figure 11: Consumer engagement in saving and investing, November 2012
- Savings accounts are underperforming
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- Figure 12: Average annual changes in the Bank of England base rate, CPI and RPI – UK, January 2010 – April 2013
- Consumers are becoming dependent on online sources of information
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- Figure 13: Main sources of information about financial products, June 2013
- Online is the most popular channel to buy and sell shares
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- Figure 14: Ways in which consumers most like to buy or sell shares, June 2013
Regulation and Legislation
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- Key points
- The RDR has changed the way advisers and providers charge clients
- Summary of the RDRs changes
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- Figure 15: Summary of the key requirements for the retail investment market, pre- and post- RDR, 2013
- RDR’s effect on the direct platform market
- The growth of white labelling
- FCA policy paper adds clarity for the direct platform market
- Banks withdrawing from the advice space, leaving an opportunity for direct platforms
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- Figure 16: Overview of selected retail banking providers investment advice services post-RDR, February 2013
- Auto-enrolment will encourage mass market consumers to own investments
SWOT Analysis
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- Figure 17: Direct Platforms Market – SWOT Analysis, 2013
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Who’s Innovating?
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- Key points
- Nutmeg brings discretionary asset management to the mass market
- rplan focuses on usability and transparency to win over consumers
- Compare fund platforms
- Money on toast - the online financial adviser
Consumers and the Appetite for Direct Platforms
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- Consumers want to do things for themselves, but also have guidance
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- Figure 18: Attitudes towards financial advice, June 2013
Companies and Products
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- Barclays Stockbrokers
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- Figure 19: Key financial data for Barclays Stockbrokers, 2011-12
- Fidelity
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- Figure 20: Key financial data for Fidelity Investment Services (UK), 2011-12
- Hargreaves Lansdown
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- Figure 21: Key financial data for Hargreaves Lansdown, 2011-12
- Selftrade
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- Figure 22: Key financial data for Talos Securities (Self Trade), 2010-11
- TD Direct Investing
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- Figure 23: Key financial data for TD Direct Investing (Europe) Ltd, 2010-11
Brand Communication and Promotion
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- Key points
- Adspend decreased in 2012/13 as the industry waited for RDR
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- Figure 24: Advertising expenditure by selected platform providers, 2008/09-2012/13
- Top five players account for over 90% of adspend
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- Figure 25: Advertising expenditure by selected platform providers, by advertiser, 2009/10-2012/13
- Providers cut back on internet spending
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- Figure 26: Advertising expenditure by selected platform providers, by media type, 2009/10-2012/13
Value of Savings and Investments and Product Ownership
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- Key points
- Consumers have low levels of savings and investments
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- Figure 27: Value of savings and investments, June 2013
- Appealing to younger consumers will help to develop future loyal customers
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- Figure 28: Amount of savings and investments, by age, June 2013
- Most consumers struggle to save
- Low-risk cash-based products remain popular despite losing value in real terms
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- Figure 29: Ownership of financial products, June 2013
- Consumers are risk-averse
Preferred Approach to Investment Decisions
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- Key points
- Consumers want to have input in choosing their investments
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- Figure 30: Attitudes towards financial advice, June 2013
- DIY investing is gaining popularity
- Wealthier consumers are more self-sufficient in choosing investments
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- Figure 31: Attitudes towards financial advice, by amount of savings and investments, June 2013
- Consumers with low levels of savings and investments are in an advice gap
Attitudes Towards Discretionary Fund Management
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- Key points
- How Mintel have defined discretionary fund management in this report
- The evolution of discretionary fund manangement
- Appetite for discretionary fund managers is divided
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- Figure 32: Attitudes towards the concept of discretionary fund management, June 2013
- Discretionary fund management is dominated by a few wealthy investors
- Younger consumers are more open to the concept of using a DFM
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- Figure 33: Attitudes towards the concept of discretionary fund management, by demographics, June 2013
- DIY investing is incompatible with the discretionary model
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- Figure 34: Attitudes towards the concept of discretionary fund management, by attitudes towards financial advice, June 2013
- DFMs could gain from marketing to consumers with lower levels of savings
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- Figure 35: Attitudes towards the concept of discretionary fund management, by amount of savings and investments, June 2013
Consumer Expectations of Investment Charges
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- Key points
- Almost half of respondents expect to pay between 1%-2.9% charges
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- Figure 36: Amount consumers expect to pay in charges, June 2013
- Consumers expect to pay less in charges as they get older
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- Figure 37: Amount consumers expect to pay in charges, June 2013
- Consumers who want expert advice expect to pay more for the privilege
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- Figure 38: Amount consumers expect to pay in charges, by Attitudes towards financial advice, June 2013
Considerations When Choosing an Investment Provider
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- Key points
- Six out of ten look for low fees when choosing an investment company
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- Figure 39: Considerations when choosing a company to invest with, June 2013
- Four out of ten consumers want a clear charging structure
- Younger consumers are less brand focused than over-55s
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- Figure 40: Considerations when choosing a company to invest with, by Age, June 2013
- Recommendations are more important for young consumers than over 55s
- Clear charging structures are the main consideration for over-55s
Preferred Level of Online Investment Choice
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- Key points
- Investors show a preference for more limited investment options
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- Figure 41: Appeal of online investment options, June 2013
- DIY investors want the lowest possible costs
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- Figure 42: Considerations when choosing a company to invest with, by appeal of investment options, June 2013
- Consumers who want a small handful of investment options want companies to use clear language
- DIY consumers expect to pay lower charges
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- Figure 43: Amount consumers expect to pay in charges, by Appeal of investment options, June 2013
- Consumers that want simple choices are more open to the idea of DFM
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- Figure 44: Attitudes towards the concept of discretionary fund management, by appeal of investment options, June 2013
- Consumers with lower levels of savings prefer fewer investment options
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- Figure 45: Appeal of investment options, by amount of savings and investments, June 2013
Appetite for Features Offered by Online Investment Providers
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- Key points
- Time poor consumers are unlikely to be interested in financial tutorials
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- Figure 46: Appetite for features offered by online investment providers, June 2013
- Investment researchers are more likely to want the largest choice of investments
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- Figure 47: Cross analysis of appeal of different investment options, June 2013
- Consumers that want to research the market are likely to want low fees
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- Figure 48: Considerations when choosing a company to invest with, by Appeal of investment options, June 2013
- Consumers with an interest in learning want to find out more about DFM
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- Figure 49: Attitudes towards discretionary fund managers, by Appeal of investment options, June 2013
Appendix – Platform Overview
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- Figure 50: Platform overview
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Appendix – Types of Discretionary Fund Manager
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- Figure 51: Types of DFM, 2013
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Appendix – Value of Savings and Investments and Product Ownership
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- Figure 52: Level of savings and investments, by demographics, June 2013
- Figure 53: Level of savings and investments, by demographics, June 2013 (continued)
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- Figure 54: Financial products consumers own or plan on owning – Savings account/Cash ISA, by demographics, June 2013
- Figure 55: Financial products consumers own or plan on owning – Company pension, by demographics, June 2013
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- Figure 56: Financial products consumers own or plan on owning – NS&I product, by demographics, June 2013
- Figure 57: Financial products consumers own or plan on owning – Personal pension, by demographics, June 2013
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- Figure 58: Financial products consumers own or plan on owning – Individual company shares, by demographics, June 2013
- Figure 59: Financial products consumers own or plan on owning – With-profits, unit-linked, money market, distribution or guaranteed investment bond, by demographics, June 2013
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- Figure 60: Financial products consumers own or plan on owning – Investment property, by demographics, June 2013
- Figure 61: Financial products consumers own or plan on owning – Unit trust/OEIC, by demographics, June 2013
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- Figure 62: Financial products consumers own or plan on owning – Investment trust, by demographics, June 2013
- Figure 63: Financial products consumers own or plan on owning – SIPP, by demographics, June 2013
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- Figure 64: Financial products consumers own or plan on owning – Financial spread-betting account, by demographics, June 2013
- Figure 65: Financial products consumers own or plan on owning – ETF, by demographics, June 2013
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- Figure 66: Financial products consumers own or plan on owning – Other savings or investments, by demographics, June 2013
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Appendix – Preferred Approach to Investment Decisions
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- Figure 67: Attitudes towards financial advice, by demographics, June 2013
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Appendix – Attitudes Towards Discretionary Fund Management
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- Figure 68: Attitudes towards discretionary fund managers, by demographics, June 2013
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Appendix – Consumer Expectations of Investment Charges
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- Figure 69: Amount consumers expect to pay in charges, by demographics, June 2013
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- Figure 70: Amount consumers expect to pay in charges, by demographics, June 2013 (continued)
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Appendix – Considerations When Choosing an Investment Provider
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- Figure 71: Most popular considerations when choosing a company to invest with, by demographics, June 2013
- Figure 72: Next most popular considerations when choosing a company to invest with, by demographics, June 2013
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Appendix – Preferred Level of Online Investment Choice
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- Figure 73: Appeal of various online investment options, June 2013
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Appendix – Appetite for Features Offered by Online Investment Providers
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- Figure 74: Appetite for features offered by online investment providers, June 2013
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