Table of Contents
Executive Summary
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- The Market
- Cash savings market conditions remain difficult
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- Figure 1: Quarterly variations in savings ratio, Q1 2005 – Q2 2015
- Government seeks to encourage savers to save more
- Despite the challenges consumers continue to recognise the importance of saving
- Significant growth opportunities for the investment market
- The Consumer
- Significant proportion of savings accounts hold little to no savings
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- Figure 2: Consumer ownership of savings products, October 2015
- Encouraging further engagement could benefit both parties
- Hostile savings environment promotes shift in consumer behaviour
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- Figure 3: Consumer engagement with the savings market, October 2015
- Investment providers have opportunity to capitalise on growing interest
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- Figure 4: Consumer attitudes towards investing, October 2015
- Motivation to save driven by personal goals rather than external stimuli
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- Figure 5: Consumer attitudes towards the impact of the economic climate on their savings habits, October 2015
- What we think
Issues and Insights
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- Persistent low rates lead to long-term shift in behaviour
- The facts
- The implications
- Dormant accounts serve as constant reminders of missed opportunities
- The facts
- The implications
- Online platforms could lower investment barriers
- The facts
- The implications
The Market – What You Need to Know
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- Cash savings market conditions remain difficult
- The Government seeks to encourage savers to save more
- Despite the challenges consumers continue to recognise the importance of saving
- Significant growth opportunities for the investment market
The Saving and Investing Environment
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- Interest rates remain low
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- Figure 6: In-branch quoted household interest rates for cash savings products, January 2005-October 2015
- Savings falls below pre-crisis levels
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- Figure 7: Quarterly variations in savings ratio, Q1 2005 – Q2 2015
- Consumers plan to save less
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- Figure 8: Consumer spending habits, September 2015
- Pensioner bonds boost NS&I deposits
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- Figure 9: Retail savings deposits 2005-15*
- Strong performance driven by popularity of cash ISAs
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- Figure 10: Volume and value of ISA subscriptions, by type of ISA, 2010/11-2014/15
- Faltering investor confidence slows investment fund sales
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- Figure 11: Retail sales of unit trusts and OEICs – UK-domiciled, 2010-15
The Regulatory Environment
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- Government to introduce personal savings allowance
- ISA regulation undergoes significant change
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- Figure 12: Summary of regulatory changes made to ISAs 2014 and 2015
- Pension freedoms could increase interest in investing
- FCA finds the UK cash savings market to be lacking in competition
- FCA outlines Asset Management Investigation
The Consumer – What You Need to Know
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- Significant proportion of savings accounts hold little to no savings
- Encouraging further engagement could benefit both parties
- Hostile savings environment promotes shift in consumer behaviour
- Investment providers have opportunity to capitalise on growing interest
- Motivation to save driven by personal goals rather than external stimuli
Consumer Ownership of Savings Products
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- Almost a fifth of consumers without savings
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- Figure 13: Consumer ownership of savings products, October 2015
- Living in the moment culture lessens interest in saving
- Cash ISAs at risk of losing competitive advantage
- 30% rely on one savings product
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- Figure 14: Number of savings products held, October 2015
Consumer Ownership of Investment Products
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- Lloyds Banking Group sale could boost ownership of shares
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- Figure 15: Consumer ownership of investment products, October 2015
- The investment property opportunity for pension savers
Value of Savings and Investments
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- 40% have less than £500 saved
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- Figure 16: Value of savings and investments, October 2015
- 40% of those with five or more products have investible assets of more than £100,000
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- Figure 17: Value of savings and investments by number of savings products owned, October 2015
- Opportunities to re-engage with dormant savers
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- Figure 18: Proportion with no savings, by number of savings products owned, October 2015
- Low interest rates encourage use of alternative products for savings
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- Figure 19: Value of savings and investments, by ownership of savings products, October 2015
Barriers to Investment
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- Majority of consumers own no investment products
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- Figure 20: Number of investment products owned, October 2015
- Risk is the biggest barrier to investment uptake
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- Figure 21: Barriers to investment product ownership, October 2015
- The online opportunity
- The need to improve transparency
Consumer Engagement with the Savings Market
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- Low interest rates reduce engagement
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- Figure 22: Consumer engagement with the savings market, October 2015
- Engaging the younger market
- Attracting the keenest savers
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- Figure 23: Consumer engagement with the savings market, by number of savings products owned, October 2015
Consumer Savings Habits
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- Savings behaviour varies according to motivation
- Help to Buy ISAs could lack flexibility needed for success
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- Figure 24: Consumer savings habits, by purpose for saving, October 2015
- Young women putting off retirement saving
The Influence of the Economic Climate on Savings Behaviour
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- Interest rates have limited impact
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- Figure 25: Consumer attitudes towards the impact of the economic climate on their savings habits, October 2015
- Younger consumers more influenced by external environment
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- Figure 26: Agreement with the statement “I save more when I am worried about the economic climate,” by age, October 2015
- The impact on engagement
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- Figure 27: Consumer engagement with the savings market, by agreement with the statement “I save more when interest rates are higher,” October 2015
Consumers and Long-Term Savings
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- Confidence in meeting long-term savings goals is low
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- Figure 28: Consumer attitudes towards long-term savings, October 2015
- Investing boosts confidence
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- Figure 29: Agreement with the statement “I am confident that I will achieve my long-term savings goals,” by ownership of savings and investment products, October 2015
Features of Savings Accounts
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- Access is key, especially among older savers
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- Figure 30: Consumer attitudes towards features of savings accounts, October 2015
Consumer Attitudes towards Investing
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- The biased savings market
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- Figure 31: Consumer attitudes towards investing, October 2015
- Cash is not enough
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- Figure 32: Ownership of investment products, by agreement with the statement “Having cash savings alone is not enough to ensure financial security,” October 2015
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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