Table of Contents
Overview
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- What you need to know
- Products covered in this Report
Executive Summary
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- The market
- Number of accounts continues to fall
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- Figure 1: Number of ISAs and amounts subscribed, 2009/10-2015/16
- Growth forecast for cash ISA and stocks and shares ISA markets
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- Figure 2: Forecast of total adult cash ISA subscriptions, at current prices, 2010/11-2020/21
- Figure 3: Forecast of total adult stocks and shares ISA subscriptions, 2010/11-2020/21
- Personal tax allowance dis-incentivises ISA savings
- Low rates drive interest in stocks and shares
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- Figure 4: Average monthly quoted cash ISA variable rate and fixed rate, January 2012-August 2016
- Lifetime ISA set to launch in April 2017
- Cross-selling is rife in the ISA market
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- Figure 5: Financial product ownership and cross-sales, July 2016
- Companies and brands
- High street banks and building societies dominate the cash ISA market
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- Figure 6: Ranking of cash ISAs providers, by proportion of ISA holders, April 2016
- Fidelity is leading provider of ISA FUM
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- Figure 7: Top 10 investment ISA providers, by ISA funds under management, as of May 2016
- Mixed approach towards Lifetime ISAs among providers
- Innovative Finance ISA brings more firms into the market
- The consumer
- Nearly half of UK adults have an ISA
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- Figure 8: Savings product ownership, September 2016
- Creating a savings ‘buffer’ is a priority…
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- Figure 9: Savings goals over the next five years, September 2016
- …but ISAs are preferred for longer-term goals
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- Figure 10: Planned use of ISA savings, September 2016
- Offering guidance could increase consideration of risk-based products
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- Figure 11: Attitudes towards risk with savings and investments, September 2016
- People like the idea of the Lifetime ISA…
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- Figure 12: Awareness and interest in Lifetime ISAs, September 2016
- …but the restrictions will put people off
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- Figure 13: Concerns about using a Lifetime ISA, September 2016
- What we think
Issues and Insights
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- Lifetime ISA could reduce contributions to pension savings
- The facts
- The implications
- Simplifications undermined by launch of new ISAs
- The facts
- The implications
- Personal Savings Allowance: the end of ISAs?
- The facts
- The implications
The Market – What You Need to Know
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- Number of accounts continues to fall
- Growth forecast for cash ISA and stocks and shares markets
- Personal tax allowance dis-incentivises ISA savings
- Lifetime ISA set to launch in April 2017
- Cross-selling is rife in the ISA market
Market Size and Forecast
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- Number of accounts subscribed to continues to fall
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- Figure 14: Number of ISAs and amounts subscribed, 2009/10-2015/16
- Cash ISAs continue to hold greater share of the market
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- Figure 15: Number of ISAs and amounts subscribed, segmented by component type, 2009/10-2015/16
- Stocks and shares see average subscription rise by 28%
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- Figure 16: Average subscription per account, 2009/10-2015/16
- Stocks and shares ISAs see biggest rise for cash on deposit
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- Figure 17: Value of funds held in adult ISAs, by type of investment, 2012/13-2015/16
- Cash ISA market forecast to reach £71.5 billion
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- Figure 18: Forecast of total adult cash ISA subscriptions, at current prices, 2010/11-2020/21
- Figure 19: Forecast of total adult cash ISA subscriptions, at current prices, 2010/11-2020/21
- Stocks and shares ISA market forecast to reach £30.9 billion
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- Figure 20: Forecast of total adult stocks and shares ISA subscriptions, 2010/11-2020/21
- Figure 21: Forecast of total adult stocks and shares ISA subscriptions, 2010/11-2020/21
- The impact of the EU Referendum vote
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- Figure 22: Post-Brexit alternative market scenarios for the value of total adult ISA subscriptions, at current prices, 2015/16-2020/21
- Figure 23: Detailed Post-Brexit scenarios for the value of total adult ISA subscriptions, at current prices, 2015/16-2020/21
- Forecast methodology
Market Drivers
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- Savings ratio continues to fall
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- Figure 24: Household savings ratio, Q1 2011-Q2 2016
- Rising cost of living will affect people’s ability to save…
- …whilst low interest rates mean those who can lack an incentive
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- Figure 25: Bank of England base rate and CPI (monthly % change) – UK, January 2011-August 2016
- Brexit vote has had little impact on confidence
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- Figure 26: Financial confidence index, January 2009-October 2016
- Low rates drive interest in stocks and shares
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- Figure 27: Average monthly quoted cash ISA variable rate and fixed rate, January 2012-August 2016
- Help to Buy terms cause confusion
Regulatory and Legislative Changes
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- Personal tax allowance dis-incentivises ISA savings
- Cash savings market study follow-up
- Lifetime ISA set to launch in April 2017
- Innovative Finance ISA investment range expanded
- ISA annual subscription limit set to increase
Channels to Market
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- Cross-selling is rife in the ISA market
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- Figure 28: Financial product ownership and cross-sales, July 2016
- People with a higher savings value present an opportunity for alternative providers
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- Figure 29: Cash ISA ownership and cross sales, by value of total savings and investments, July 2016
- Investment experts preferred for stocks and shares
Companies and Brands – What You Need to Know
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- High street banks and building societies dominate the cash ISA market
- Mixed approach towards Lifetime ISAs among providers
- ISA providers abandon new rules
- ISA advertising spend rises for the first time since 2011/12
Market Share
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- High street banks and building societies dominate the market
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- Figure 30: Ranking of cash ISAs providers, by proportion of ISA holders, April 2016
- Investors prefer specialist providers
- ‘Other’ providers increase share
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- Figure 31: Top 10 investment ISA providers, by ISA funds under management, as of May 2016
Competitive Strategies
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- Mixed approach towards Lifetime ISAs among providers
- Innovative Finance ISA brings more firms into the market
- ISA providers abandon new rules
- Improving personal financial management to increase savings
Advertising and Marketing Activity
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- ISA advertising spend rises for the first time since 2011/12
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- Figure 32: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by component type, 2011/12-2015/16*
- Press no longer dominates adspend
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- Figure 33: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by media type, 2015/16*
- Cash ISA spend growth propelled by some key spenders
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- Figure 34: Top 10 recorded above-the-line, online display and direct mail advertisers of cash ISAs, 2011/12-2015/16
- Aviva tops list for stocks and shares ISA spend
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- Figure 35: Top 10 recorded above-the-line, online display and direct mail advertisers of stocks and shares ISAs, 2011/12-2015/16
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Nearly half of UK adults have an ISA
- Creating a savings ‘buffer’ is a priority…
- …but ISAs are preferred for longer-term goals
- Offering guidance could increase consideration of risk-based products
- People like the idea of the Lifetime ISA…
- …but the restrictions will put people off
Savings Product Ownership
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- Nearly half of adults own an ISA
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- Figure 36: Savings product ownership, September 2016
- Cash ISAs are the most popular form of ISAs
- Stocks and shares ISAs are much less common
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- Figure 37: Savings product ownership, by value of savings and investments, September 2016
- ISAs should be a first-choice savings product
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- Figure 38: Repertoire of different types of savings and investment product ownership, September 2016
General Motivations for Saving
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- Half are saving for emergencies/ unexpected events
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- Figure 39: Savings goals over the next five years, September 2016
- Lifetime ISA will struggle to attract retirement savings
- Stocks and shares ISAs more popular among those with longer-term savings goals
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- Figure 40: Savings goals over the next five years, by savings product ownership, September 2016
Planned Use of ISA Savings
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- ISAs used for a combination of short and long-term goals
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- Figure 41: Planned use of ISA savings, September 2016
- Lifetime ISA could attract a significant proportion of ISA savings
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- Figure 42: Planned use of ISA savings, by age, September 2016
- Stocks and shares ISAs dominated by retirement savings
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- Figure 43: Planned use of ISA savings, by ISA product ownership, September 2016
- People would benefit from clarifying their ISA savings goals
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- Figure 44: Repertoire of planned use of ISA savings, September 2016
Attitudes towards Risk
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- Majority are unwilling to take risks with their savings
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- Figure 45: Attitudes towards risk with savings and investments, September 2016
- Target financially confident Millennials
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- Figure 46: Agreement with the statement ‘I would be interested in taking more risk but need some guidance to do so’, by age, September 2016
- Innovative Finance ISA will attract high-value savers
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- Figure 47: Agreement with the statement ‘I'm interested in exploring alternative finance products that could offer a better return (investing in peer-to-peer lending, crowdfunding)’, by value of savings, September 2016
Attitudes towards ISAs and Saving
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- Instant access is an important account feature
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- Figure 48: Attitudes towards ISAs and saving, September 2016
- There is an opportunity to increase active ISA contributions
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- Figure 49: Attitudes towards ISAs and saving, by ISA product ownership, September 2016
- Alternative ISA holders find them complicated
- Low interest rates pose an opportunity for the stocks and shares market
Awareness and Expected Usage of the Lifetime ISA
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- The majority have heard of the Lifetime ISA
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- Figure 50: Awareness and interest in Lifetime ISAs, September 2016
- 24-27-year-olds are a prime target
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- Figure 51: Awareness and interest in Lifetime ISAs, by age, September 2016
- Providers need to communicate benefits among the self-employed
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- Figure 52: Awareness and interest in Lifetime ISAs, by working situation, September 2016
Attitudes towards Lifetime ISAs
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- Lifetime ISA provides cross-selling opportunity
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- Figure 53: Attitudes towards Lifetime ISAs, September 2016
- Is it appropriate to save for a home and retirement together?
- Lifetime ISAs pose a threat to pension contributions…
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- Figure 54: Considerations for savings in a Lifetime ISA, September 2016
- …but the restrictions will be off-putting for many
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- Figure 55: Concerns about using a Lifetime ISA, September 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Value of Savings
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- Figure 56: Value of savings and investments, September 2016
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Appendix – Market Size and Forecast
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- Best- and worst-case forecasts for cash ISA subscription value
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- Figure 57: Best- and worst-case forecasts for total adult cash ISA subscriptions, at current prices, 2015/16-2020/21
- Best- and worst-case forecasts for stocks and shares ISA subscription value
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- Figure 58: Best- and worst-case forecasts for total adult stocks and shares ISA subscriptions, at current prices, 2015/16-2020/21
- Cash ISA volume forecast
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- Figure 59: Market forecast for number of adult cash ISA subscriptions, 2010/11-2020/21
- Figure 60: Best- and worst-case forecasts for total number of adult cash ISA subscriptions, 2015/16-2020/21
- Stocks and Shares ISA volume forecast
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- Figure 61: Market forecast for number of adult stocks and shares ISA subscriptions, 2010/11-2020/21
- Figure 62: Best- and worst-case forecasts for number of adult stocks and shares ISA subscriptions, 2015/16-2020/21
- Forecast Methodology
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