Table of Contents
Overview
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- What you need to know
- Product definitions
Executive Summary
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- The market
- Gross sales up but net sales down sharply following market volatility
- Only a minority own investment products
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- Figure 1: Investment products owned, by investment type, July 2016
- Sales volumes have stabilised after RDR
- Rise in non-advised sales
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- Figure 2: Advised and non-advised new sales based upon sales data of bonds, stocks and shares ISAs, trusts and OEICs, 2011-15
- UK fund platforms account for 46% of new sales
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- Figure 3: Gross retail sales, by distribution channel, 2015
- Companies and brands
- Standard Life and Invesco Perpetual top the asset manager ranking by FUM
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- Figure 4: Top 10 asset managers, by total retail funds under management, as of March 2016
- Mergers and acquisitions
- The consumer
- 51% of consumers are uncomfortable with investment risk
- Limited appetite for investment products
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- Figure 5: Consumer investment plans over the next 12 months, July 2016
- Lack of investable assets puts consumers off
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- Figure 6: Consumer reasons for not owning, or wanting to own investment products, July 2016
- Online platforms popular among investors
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- Figure 7: Channels consumers expect to use to invest, July 2016
- Low interest rates boost investment opportunities
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- Figure 8: Consumer agreement with statements regarding investing, July 2016
- What we think
Issues and Insights
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- Generation X – A lost generation of investors
- The facts
- The implications
- Ethical and green funds provide opportunity to engage with young investors
- The facts
- The implications
The Market – What You Need to Know
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- Gross sales up but net sales down sharply following market volatility
- Only a minority own investment products
- Sales volumes have stabilised after RDR
- Rise in non-advised sales
- UK fund platforms account for 46% of new sales
Market Size and Forecast
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- Investment growth slows
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- Figure 9: Value of gross and net retail sales, 2012-15
- 67% of the UK have £30,000 or less in savings or investments
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- Figure 10: Value of consumers’ savings and investments, July 2016
- Only 25% of adults own an investment product
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- Figure 11: Investment products owned, by investment type, July 2016
- Market forecast
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- Figure 12: Forecast of the value of new gross sales, 2011-21
- Figure 13: Forecast of the value of new gross sales, 2011-21
- Brexit impact on investments
- Investor behaviour during the last recession
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- Figure 14: Alternative market scenarios for the post-Brexit investment market, at current prices, 2016-21
- Figure 15: Alternative market scenarios for the post Brexit investment market, at current prices, 2016-21
- Very little has changed for non-investors
- Forecast methodology
Market Segmentation
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- Equity investing comes in many forms
- Mixed growth among asset types
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- Figure 16: Net retail sales of funds, by asset class, 2011-15
- Popularity of trusts and OEICs has increased
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- Figure 17: New retail investment sales, 2011-15
Channels to Market
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- Main channels
- Retail sales dominated by fund platforms
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- Figure 18: Gross retail sales, by distribution channel, 2015
- Figure 19: Gross retail sales, by distributions channel, 2011-15
- Sharp drop in advised sales
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- Figure 20: Advised and non-advised new sales based upon sales data of bonds, stocks and shares ISAs, trusts and OEICs, 2011-15
Market Drivers
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- Low interest rates lead to increased interest in investments…
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- Figure 21: Bank of England bank base rate, January 2000-July 2016
- …but consumers continue to rely on cash savings products
- Brexit creates some opportunities but also undermines investor confidence
- Pension reforms increase investment opportunities
Regulatory and Legislative Changes
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- MiFID II on the horizon
- FCA publishes its findings on the advice market
- Robo-advice unit gets the green light
- Countdown to PRIIPs
Companies and Brands – What You Need to Know
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- Mergers and acquisitions
- Asset managers reassess pricing strategies
- New environmentally friendly funds announced
Market Share
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- Standard Life tops the table for retail funds under management
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- Figure 22: Top 10 asset managers, by total retail funds under management, as of March 2016
Competitive Strategies
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- Merger and acquisition activity
- Cofunds to be sold to AEGON
- AXA’s Elevate sale
- Asset managers reassess pricing strategies
- M&G cut funds for direct investors
- Ballie Gifford cuts investment trust fees
- Speculation about zero-fee funds
- Ethical investing developments
- Jupiter launches environmentally friendly fund
- Morningstar launches ESG ratings
- Third-party apps to increase investment opportunities
- Aviva aims to make Britain’s savers smarter
Advertising and Marketing Activity
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- Aviva considerably increases adspend
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- Figure 23: Total above-the-line, online display and direct mail investment-related adspend, by advertiser, 2011/12-2015/16
- Majority of adspend attributed to stocks and shares ISAs
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- Figure 24: Total above-the-line, online display and direct mail advertising expenditure on equity investment products, 2011/12-2015/16
- Press advertisements dominate the market
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- Figure 25: Total above-the-line advertising, by media type, 2015/16
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- 51% are uncomfortable with taking risks
- Vast majority of consumers are uncomfortable with investment risk
- Only around a quarter of adults own an investment product
- Lack of investable assets puts consumers off
- Online platforms popular among investors
- Low interest rates boost investment opportunities
Investable Assets and Consumer Attitudes towards Investment Risk
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- A third of consumers have £500 or less in savings or assets
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- Figure 26: Value of consumers’ savings and investments, July 2016
- Many consumers uncomfortable with investment risk
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- Figure 27: Consumers’ comfort with taking risks with savings, July 2016
- Appetite for risk decreases with age
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- Figure 28: Consumers’ comfort with investment risk, by age, July 2016
- Amount of savings and investment affects risk appetite
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- Figure 29: Consumers’ comfort with investment risk, by consumers’ savings and investments, July 2016
Current and Future Ownership of Investment Products
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- Majority of consumers do not own an investment product
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- Figure 30: Investment products owned, by investment type, July 2016
- Majority of consumers only own one investment product
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- Figure 31: Number of investment products owned, repertoire analysis, July 2016
- Generation X least likely to own an investment product
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- Figure 32: Consumers who own an investment, by generation, July 2016
- 82% of consumers do not intend to take out an investment product in the next 12 months
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- Figure 33: Consumer investment plans over the next 12 months, July 2016
Barriers to Investing
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- Lack of investable assets are a major barrier
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- Figure 34: Consumer reasons for not owning, or wanting to own investment products, July 2016
- One in 10 are put off by fees and charges
- A third do not wish to take any risks with their savings
- Trust in investment companies lowest amongst older demographics
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- Figure 35: Consumer agreement with the statement I do not trust investment companies’, by age, July 2016
Reasons for Investing
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- Motivations to save will influence how people approach investments
- Low rates provide motivation for older investors
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- Figure 36: Consumer reasons for investing, July 2016
- Almost a fifth of consumers invest for fun
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- Figure 37: Consumer reasons for investing, by age, July 2016
Methods of Arranging Investments
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- High street banks/building societies most popular option for arranging investments
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- Figure 38: Channels consumers expect to use to invest, July 2016
- Online platforms prove a popular option among older Millennials
- Direct channels appeal to more than a third of potential investors
Consumer Attitudes towards Investing
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- Fall in interest rates boosts interest in investing
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- Figure 39: Consumer agreement with statements regarding investing, July 2016
- Many consider ethical options but fail to act on it
Consumer Attitudes towards Fees
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- Direct investing seen as a cheaper option
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- Figure 40: Consumer agreement with statements regarding investment fees, July 2016
- Consumers are unwilling to pay for actively managed funds
- Comparing fees causes a headache for consumers
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Figure 41: Forecast of the value of new gross sales, 2016-21
- Forecast methodology
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