Table of Contents
Executive Summary
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- The market
- Market expected to grow as number of children increases
- The economic environment is slowly improving for families
- Regulation change and Budget announcements have big implications for the children’s savings market
- Key players
- Children’s savings products low priority for provider advertising spend
- Encouraging engagement through financial education is key to company strategy
- The consumer
- Growing proportion of parents say nobody saves on behalf of their child
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- Figure 1: Saving on behalf of children, February 2015
- JISA ownership has increased but remains subdued
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- Figure 2: Ownership of children’s savings products, February 2015
- Majority of parents’ motivations for their children’s savings are non-specific, but university costs account for a large proportion
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- Figure 3: Reasons for saving for children, February 2015
- Limited application of tax to children’s savings accounts dampens interest in tax-free products
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- Figure 4: Consumers’ understanding of how tax is applied to children’s savings, February 2015
- The savings habits of parents
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- Figure 5: Attitudes towards savings habits, February 2015
- Desire to save on children’s behalf is not always strong enough to motivate parents to take a stricter approach to budgeting
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- Figure 6: Parent attitudes towards savings budgets, February 2015
- A fifth of parents would be interested in purpose-specific children’s savings products
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- Figure 7: Parent attitudes towards reasons for saving for children and relevant products, February 2015
Issues and Insights
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- The market for a ‘university savings account’
- The facts
- The implications
- Saving for children is about more than the accumulation of value
- The facts
- The implications
- The Child Trust Fund to Junior ISA Transition
- The facts
- The implications
The Market – What You Need to Know
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- Projected 6% increase in under-15s population in next five years
- Family finances begin to improve, but concern about the future remains elevated
- Switching to JISAs possible for CTF owners from April
- JISA subscription limit increased but interest in product undermined by lack of necessity for tax-free children’s savings products
Market Size and Growth Potential
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- Market size for children’s savings products
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- Figure 8: Estimated number of children’s savings accounts, by type, 2014
- Market growth potential
- A number of caveats to keep in mind
The Economic Environment for Families
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- Family finances finally begin to improve
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- Figure 9: Consumers’ assessment of their current financial situation (in terms of how this compares to 12 months ago) and how confident they are for the next 12 months, by presence of children, February 2015
The Regulatory Environment
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- Child Trust Fund owners allowed to switch to Junior ISAs
- Budget 2015: Boosts to Savers
- Junior ISAs
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- Figure 10: Junior ISA subscription limits, 2011-15
- Help-to-Buy ISA
- Personal Savings Allowance
Key Players – What You Need to Know
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- Children’s savings accounts dominate the market
- Junior ISAs are far behind
- Adspend for children’s savings products continued to fall in 2014
- The role of education in competing for new business
Product Range
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- Children’s Savings Accounts
- Child Trust Funds
- Junior ISAs
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- Figure 11: Number of Junior ISAs, amounts subscribed and average subscription, 2011/12-2013/14
- Bonds
Advertising Spend
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- Children’s savings products low priority for advertising expenditure
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- Figure 12: Total advertising expenditure on children’s savings and investment products (including junior ISAs), 2011/12-2014/15
- Press is the main media type used
- Negligible adspend on Junior ISAs
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- Figure 13: Total advertising expenditure on junior ISA products, 2010/11-2014/15
Competitive Strategies
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- Education is the way forward
- Educationally driven product design
- Providing online support
- Branching out
- Alternative providers
- Channels to market
The Consumer – What You Need to Know
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- 34% of parents say nobody saves on behalf of their children
- Growth potential of Junior ISAs
- Future uncertainty drives parents to save
- 2015 budget reduces the need for parents to understand tax applications for children’s savings
- More than a fifth currently cannot afford to save for their children…
- …but few take active steps to change this
- The market for goal-specific products…
- …but also products that progress as the child develops
Saving on Behalf of Children
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- More than a third of parents state that nobody saves on behalf of their children
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- Figure 14: Saving on behalf of children, February 2015
- Increase in the number of grandparents saving for their grandchildren
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- Figure 15: Number of contributors to children’s savings by individuals contributing, February 2015
- Parents of younger children more able to save
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- Figure 16: Contributors to children’s savings, by detailed life-stage, February 2015
- Lack of support for those on lower incomes…
- …particularly single parents
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- Figure 17: Contributors to children’s savings by current marital status, February 2015
Children’s Savings Products
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- Ownership of Junior ISAs continues to increase
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- Figure 18: Ownership of children’s savings products, February 2015 and March 2014
- Cash-based products lead the way
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- Figure 19: Ownership of children’s savings products, February 2015
- Risk aversion and lack of understand discourage investing
- Two thirds of consumers hold their children’s savings in just one product
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- Figure 20: Number of children’s savings products held, February 2015
Reasons for Contributing to Children’s Savings
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- Future uncertainty drives parents to save
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- Figure 21: Reasons for saving for children, February 2015
- Education costs are the second most popular reason to save
- Parents of older children are more likely to have definite savings goals
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- Figure 22: Those contributing to their children’s savings for their future/general savings, by life-stage of family, February 2015
- Encouragement for children to save comes from a range of sources
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- Figure 23: Number of people saving on behalf of children, by reasons for saving for children, February 2015
- Figure 24: Ownership of children’s savings accounts, by reasons for saving for children, February 2015
- Rising costs of university boosts ownership of children’s savings products…
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- Figure 25: Repertoire of children’s savings products, by reasons for saving for children, February 2015
- ….but it can become demoralising when goals are not achievable
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- Figure 26: Proportion of parents saving for the cost of university/education, 2010-15
Tax and Children’s Savings Accounts
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- Majority of parents are unaware or unsure of how tax is applied to children’s savings
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- Figure 27: Consumers’ understanding of how tax is applied to children’s savings, February 2015
- Low awareness dampens interest in tax-free products
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- Figure 28: Children’s savings products, by consumers’ understanding of application of tax to children’s savings, February 2015
The Savings Habits of Parents
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- Strong sentiment to encourage children to manage their own money does not translate into proactive action
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- Figure 29: Attitudes towards savings habits, February 2015
- Parents that are more engaged take more proactive action
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- Figure 30: Attitudes towards saving and investing for children, by number of children’s savings products owned and saving for the purpose of encouraging child to save, February 2015
- The digital opportunity to encourage wider engagement
- Alternative providers
- Children’s savings product providers
- The benefits of facilitating conversation
Parents’ Attitudes towards Saving and Budgeting
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- More than a fifth currently cannot afford to save for their children…
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- Figure 31: Parents’ attitudes towards savings budgets, February 2015
- …but few take active steps to change this…
- …unless motivated by a quantifiable goal that makes saving easier
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- Figure 32: Proportion of parents who spend less on non-essential items for themselves so that they can contribute to their children’s savings, by reasons for saving for children, February 2015
The Developing Product Market
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- The market for goal-specific products
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- Figure 33: Parents’ attitudes towards reasons for saving for children and relevant products, February 2015
- Products that progress as the child develops
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- Figure 34: Parents’ attitudes towards savings habits, by age of children in family, February 2015
- The potential to boost Junior ISA sales through a focus on education
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- Figure 35: Proportion of parents that encourage their children to manage their money and spend less on non-essential items for themselves to contribute to their children’s savings, by JISA ownership
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