Table of Contents
Executive Summary
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- The market
- Stock broker revenues expected to continue to increase to 2019
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- Figure 1: Forecast for total revenues by stockbroking firms, 2009-19
- Royal mail IPO lead to an increase in the number of new account openings
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- Figure 2: X-O account openings, 2007-13
- Portfolio segmentation
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- Figure 3: Total percentage change in the number of accounts/portfolios, by value band – nominee accounts only, 2013
- The value of X-O assets managed has doubled since 2009
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- Figure 4: Value of assets managed, by execution-only and full-service stockbrokers, 2009-13
- Trade volumes increase for the first time in three years
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- Figure 5: Historical trade volumes for X-O stockbrokers (millions)
- Market factors
- Wage stagnation eroding consumers’ disposable income
- Global stocks markets exceed pre-recession levels
- Low cash interest rates continue to make equity investment more attractive
- Increase in number of IPOs is boosting awareness of share dealing
- NISAs expected to help encourage more consumers to dabble in equities
- Companies, brands and innovation
- Hargreaves Lansdown increases its share of the X-O share dealing market
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- Figure 6: Total revenues for selected stockbrokers, 2013 (Year ending 31 December – unless otherwise stated)
- Brand promotion
- Who’s innovating?
- The consumer
- Ownership of share dealing accounts
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- Figure 7: Ownership of share dealing accounts, June 2014
- Reasons for not owning a share dealing account
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- Figure 8: Reasons for not owning a share dealing account, June 2014
- Reasons for choosing a share dealing provider
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- Figure 9: Reasons for choosing share dealing provider, June 2014
- Attitudes towards share dealing
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- Figure 10: Attitudes towards share dealing, June 2014
- Interest in investing in stock market flotations
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- Figure 11: Interest in investing in stock market flotations, June 2014
- What we think
Issues and Insights
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- Banks can leverage their strong brands to compete in offering share dealing services
- The facts
- The implications
- Direct discretionary could emerge as a competitor to share dealing
- The facts
- The implications
- The proliferation of IPOs can drive growth in the share dealing market
- The facts
- The implications
- Making share dealing less daunting to new investors
- The facts
- The implications
Trend Application
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- Share dealing providers can capitalise on the social value of financial education
- Providers can leverage the influence of their advocates
- Mintel Futures: Access Anything Anywhere
Market Drivers
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- Key points
- Higher earners are avoiding the worst of the income squeeze
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- Figure 12: Annual % change in average weekly earnings, CPI and RPI, March 2009 – July 2014
- Figure 13: “How have your finances changed over the last 12 months?”, by household income, September 2014
- Global stocks markets exceed pre-recession levels
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- Figure 14: Performance of Nikkei 225, FTSE 100 and S&P 100, January 2003-July 2014
- Low cash interest rates continue to make equity investment more attractive
- Increase in number of IPOs is boosting awareness of share dealing
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- Figure 15: Number of IPOs on the UK Main Market, 2006-14
- The RDR has pushed smaller investors to X-O share dealing platforms
- FCA’s thematic review finds uncertainty around definitions of advice
- The 2014 Budget changes
- ISAs
- Annuities
- End of the distinction between cash and equity ISAs will benefit share dealing providers
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- Figure 16: Number of ISAs and amounts subscribed, segmented by type, 2005/06-2013/14
- Increased investment in ISAs will mainly go to OEICs and Unit Trusts
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- Figure 17: Market value of funds held in stocks and shares ISAs, 2012-14
- Housing is a popular investment for consumers
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- Figure 18: New buy-to-let mortgage business, 2007-13
SWOT Analysis
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- Figure 19: UK share dealing market – SWOT Analysis 2014
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Who’s Innovating?
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- Key points
- Charles Stanley launches January sale
- Interactive Investor to partner with companies wanting to offer share dealing services
- Hargreaves Lansdown set to launch direct-to-consumer discretionary service
- IG Group launches international share dealing platform
- Firms from the US are looking to disrupt the self-directed investing market
- True Potential launches ImpulseSave to help customers to save and invest more
Market Size and Forecast
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- Key points
- X-O stockbroking firms continue to grow steadily in 2014
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- Figure 20: Total revenues by stockbroking firms, 2009-14
- Inactivity and regular fees account for an increasing proportion of X-O revenues
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- Figure 21: Stockbroking revenue streams, by firm type, 2013 and 2014
- Assets under management continue to increase, buoyed by strong stock market performance
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- Figure 22: Value of assets managed, by execution-only and full-service stockbrokers, 2009-13
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- Figure 23: Amount of savings and investments, by share dealing ownership, June 2013
- The number of new accounts increased dramatically in 2013
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- Figure 24: X-O account openings, 2007-13
- Share dealing revenue expected to grow over the next five years
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- Figure 25: Forecast for total revenues by stockbroking firms, 2009-19
- Figure 26: Forecast for total revenues by stockbroking firms, 2009-19
- Forecast methodology
- Fan chart explanation
Portfolio Segmentation
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- Key points
- Investors with less than £50,000 pushed towards X-O channels
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- Figure 27: Number of accounts/portfolios, by value band – nominee accounts only, 2013
- Over half of X-O assets are held in tax wrappers
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- Figure 28: Assets by ownership as a proportion of total investment assets for X-O accounts, 2012 and 2013
Trading Activity
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- Key points
- Trade volumes increase for the first time in three years
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- Figure 29: Historical trade volumes for X-O stockbrokers (millions)
- Trading activity is bullish as purchases outpaced sales in 2013
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- Figure 30: Historical bargain volumes* Q1 1998 – Q4 2013
- Investors have become more cautious about overseas equities
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- Figure 31: Bargain volumes, by asset class, 2012 and 2013
Market Share
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- Key points
- Hargreaves Lansdown increases its share of the X-O share dealing market
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- Figure 32: Total revenues for selected stockbrokers, 2011-13
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- Figure 33: Total revenues for Hargreaves Lansdown, 2011-14
- Top five firms continue to dominate the X-O market
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- Figure 34: Share of total revenue, by the largest firms in each sector, 2010-13
Companies and Products
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- X-O stock broking charges
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- Figure 35: Charges of the eight largest stockbrokers*, September 2014
- Barclays Stockbrokers
- Description
- Product range
- Financial performance
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- Figure 36: Key financial for Barclays Stockbrokers Limited, 2012 and 2013
- Recent activity
- Halifax Share Dealing
- Description
- Product range
- Financial performance
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- Figure 37: Key financials for Halifax Share Dealing Limited, 2012 and 2013
- Recent activity
- Hargreaves Lansdown
- Description
- Product range
- Financial performance
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- Figure 38: Key financials for Hargreaves Lansdown, 2012-14
- Recent activity
- Selftrade
- Description
- Product range
- Financial performance
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- Figure 39: Key financials for Talos Securities Ltd, 2012 and 2013
- Recent activity
- The Share Centre
- Description
- Product range
- Financial performance
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- Figure 40: Key financials for The Share Centre Limited, 2012 and 2013
- TD Direct Investing
- Description
- Product range
- Financial performance
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- Figure 41: Key financials for TD Direct Investing, 2012 and 2013
- Recent activity
Brand Communication and Promotion
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- Key points
- Advertising expenditure decreases in 2013/14 due to lower market volatility
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- Figure 42: Total value of share dealing advertising, 2009/10-2013/14
- Share dealing companies focus on advertising to wealthier, over-45s
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- Figure 43: Top 10 advertisers – stockbrokers and share dealing only, 2009/10-2013/14
- Press becomes the most popular advertising channel for share dealing providers
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- Figure 44: Total advertising by stockbrokers, share dealers and stocks and shares ISA providers, by media type, 2009/10-2013/14
- A note about adspend
Channels to Market
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- Key points
- The value of non-managed assets overtook advisory assets in 2013
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- Figure 45: Full-service stockbroker assets, by management channel, 2009-13
- The proportion of online trades fall due to stock market stability
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- Figure 46: Online trades as a percentage of X-O trades, 2008-2013
Ownership of Share Dealing Accounts
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- Key points
- X-O share dealing accounts remain a niche product
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- Figure 47: Ownership of share dealing accounts, June 2014
- Broadening the appeal of share dealing will come with challenges
- Targeting long-term investors will help to make share dealing appeal to a broader audience
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- Figure 48: Ownership of Share dealing accounts, by gender, June 2014
- Under-35s are more likely to be interested in opening a share dealing account in future
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- Figure 49: Ownership of Share dealing accounts, by age, June 2014
- Many consumers prefer to invest in property than the stock market
- X-O share dealing has not democratised ownership of investments
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- Figure 50: Ownership of Share dealing accounts, by gross annual income and current financial situation, June 2014
Reasons for Not Owning a Share Dealing Account
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- Key points
- Affordability is the biggest barrier to share dealing ownership
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- Figure 51: Reasons for not owning a share dealing account, June 2014
- Education can help to improve the appeal of share dealing
- Providers could benefit from making the account opening process more straightforward
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- Figure 52: Reasons for not owning a share dealing account, by Ownership of Share dealing accounts, June 2014
- Younger consumers expect share dealing to be time consuming
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- Figure 53: Reasons for not owning a share dealing account, by age, June 2014
Reasons for Choosing a Share Dealing Provider
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- Key points
- Low charges are the key to attracting new consumers
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- Figure 54: Reasons for choosing share dealing provider, June 2014
- Share dealing providers can benefit from offering simple charging structures
- A quarter of share dealers want their provider to be a well-known brand
- A customised online approach can make share dealing seem less daunting
- Sometimes it’s better to have less choice, not more
- Trading apps will become increasingly important
Attitudes towards Share Dealing
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- Key points
- Share dealers are aware of the impact of low interest rates
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- Figure 55: Attitudes towards share dealing, June 2014
- 61% of X-O share dealers enjoy trading
- Investors show appetite for AIM-listed shares, but must be advised of the risk
- Half of share dealing customers express interest in international shares
- Advised share dealers are more likely to want to be long-term investors
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- Figure 56: Attitudes towards share dealing, by Ownership of Share dealing accounts, June 2014
- Falling stock markets may be problematic for providers if they don’t take the time to educate their customers
Interest in Investing in Stock Market Flotations
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- Key points
- IPOs can help to get non-hobbyist investors into share dealing
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- Figure 57: Interest in investing in stock market flotations, June 2014
- 16% were tempted to purchase shares, but decided not to
- Three fifths of existing customers have invested in a company flotation
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- Figure 58: Interest in investing in stock market flotations, by Ownership of Share dealing accounts, June 2014
- For the hard-pressed, share dealing is a luxury they can’t afford
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- Figure 59: Interest in investing in stock market flotations, by demographics, June 2014
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