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
- Gross fund sales are expected to continue growing amid uncertainty
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- Figure 1: Forecast of the value of gross retail sales, 2012-22
- UK fund platforms up as non-advised sales dominate
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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, 2012-16 H1
- Low investable assets and interest rates shape the market
- 2018: a year of regulatory change
- Companies and brands
- M&G takes top spot for retail funds under management
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- Figure 3: Top 10 asset managers, by total retail funds under management, as of March 2017
- The consumer
- More than half with savings or investments are uncomfortable with risk
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- Figure 4: Level of comfort with investment risk, July 2017
- A third of people have at least one investment product
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- Figure 5: Investment product ownership, July 2017
- Perceptions about profitability are holding potential investors back
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- Figure 6: Reasons for not investing, July 2017
- Two thirds of investors intend to be active in the next year
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- Figure 7: Investors’ intentions, July 2017
- Broad financial gains are the strongest drivers behind investing
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- Figure 8: Motivations for investing, July 2017
- Investors’ attitudes suggest simpler investment services could appeal
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- Figure 9: Attitudes towards Investing, July 2017
- What we think
Issues and Insights
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- With-profits products offer potential as retirement income boosters
- The facts
- The implications
- Simplification is the key to expanding the market
- The facts
- The implications
The Market – What You Need to Know
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- Gross fund sales are expected to continue growing amid uncertainty
- Performance has varied across asset types
- UK fund platforms up as non-advised sales dominate
- Low investable assets and interest rates shape the market
- 2018: a year of regulatory change
Market Size and Forecast
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- Net fund sales drop as investors respond to uncertainty
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- Figure 10: Value of gross and net retail sales, 2012-16
- Guaranteed and with-profit bonds make considerable progress
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- Figure 11: Unit linked, guaranteed, and with profit bonds
- A third of UK adults have at least one investment product
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- Figure 12: Investment product ownership, July 2017
- Market forecast
- Gross fund sales are expected to grow despite uncertainty
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- Figure 13: Forecast of the value of gross retail sales, 2012-22
- Figure 14: Forecast of the value of gross retail sales, with current prices, 2012-22
- Forecast methodology
Market Segmentation
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- Significant variance in growth and decline of asset types
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- Figure 15: Net retail sales of funds, by asset class, 2012-16
- Unit trusts/OEICs benefit from interest in spreading risk
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- Figure 16: New retail investment sales, by investment product type, 2012-16
- Value of stocks and shares ISAs drops for first time in seven years
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- Figure 17: Number of ISAs, amounts subscribed to each component and average subscription per account, 2008-09/2015-16*
Channels to Market
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- UK fund platforms facilitate almost half of gross retail sales
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- Figure 18: Gross retail sales, by distribution channel, 2016
- Figure 19: Gross retail sales, by distribution channel, 2012-16
- Non-advised sales dominate the market
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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, 2012-16 H1
- Figure 21: Use of advice in the past 3 years, July 2017
- Only 16% used face-to-face channels to buy investments in last six months
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- Figure 22: Typical investment methods, July 2017
Market Drivers
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- Low investable assets restrict investment potential
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- Figure 23: Value of people’s savings and investments, July 2017
- Low interest rates motivate savers to seek better returns…
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- Figure 24: Average monthly quoted household deposit and cash ISA interest rates, March 2011-March 2017
- …but many people still choose to hold their savings in cash
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- Figure 25: Cash savings product ownership, July 2017
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- Figure 26: Consumer confidence in choosing financial services products, Rebase, May 2016
- Brexit has created uncertainty for investors
Regulatory and Legislative Changes
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- EU MiFID II implementation clashes with other legislation due in 2018
- MiFID II
- PRIIPs
- Senior Managers’ & Certification Regime
- Summary
- FCA publishes final findings on asset management…
- …leading to a package of remedies
- FCA to investigate investment platforms
Companies and Brands – What You Need to Know
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- M&G takes top spot for retail funds under management
- With-profits products, micro-investing and Lifetime ISAs offer promise
- Advertising spend returns to growth in 2016-17
Market Share
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- M&G takes top spot for retail funds under management
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- Figure 27: Top 10 asset managers, by total retail funds under management, as of March 2017
Competitive Strategies
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- Firms consider with-profits propositions to target retirement market
- Prudential
- Aviva
- Foresters Friendly Society
- Micro-investing encourages movement away from cash savings
- Providers see opportunity in banks’ lacklustre response to Lifetime ISA
- Downward pressure on fees mounts following Vanguard pledge
Advertising and Marketing Activity
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- Advertising spend returns to growth in 2016-17
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- Figure 28: Total above-the line, online display and direct mail advertising expenditure on investment products, by product type, 2014/15-2016/17*
- TD Direct up the ante in the direct-to-consumer platform market
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- Figure 29: Total above-the line, online display and direct mail advertising expenditure on investment products, by advertiser, 2014/15-2016/17*
- Platform providers optimise SEO in bid to increase traffic
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- More than half with savings or investments are uncomfortable with risk
- A third of people have at least one investment product
- Perceptions about profitability are holding potential investors back
- Two thirds of investors intend to be active in the next year
- Broad financial gains are the strongest drivers behind investing
- Investors’ attitudes suggest simpler investment services could appeal
Risk Sensitivity and Investable Assets
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- More than half with savings or investments are uncomfortable with risk
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- Figure 30: Level of comfort with investment risk, July 2017
- Millennials more likely to feel comfortable with risk
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- Figure 31: Level of comfort with investment risk, July 2017
- More investable assets foster a braver approach to risk-taking
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- Figure 32: Level of comfort with investment risk, by investable assets, July 2017
Investment Product Ownership
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- A third of people have at least one investment product
- Different approaches to owning shares
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- Figure 33: Investment product ownership, July 2017
- 14% of people have more than one investment product
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- Figure 34: Number of investment products owned, excluding ‘other investments’, July 2017
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- Figure 35: Number of investment products owned, by investment products owned, July 2017
Barriers to Investing and Likelihood to Invest
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- Lack of funds and risk aversion are main barriers to investing
- Perceptions about profitability are holding potential investors back
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- Figure 36: Reasons for not investing, July 2017
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- Figure 37: Number of reasons for not investing, July 2017
- Non-investors aged 45-64 are difficult for providers to reach
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- Figure 38: Reasons for not investing, by age, July 2017
- Those with £30,000 or more are the most risk averse
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- Figure 39: Reasons for not investing, by investable assets, July 2017
- Only one in ten non-investors intends to invest in the coming year
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- Figure 40: Likelihood to start investing, July 2017
- Younger people are more likely to say they will invest in the next year
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- Figure 41: Likelihood to start investing, by age, July 2017
- Risk aversion is among the most enduring barriers to investing
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- Figure 42: Likelihood to start investing, by barriers to investing, July 2017
Investors’ Intentions for the Future
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- Two thirds of investors intend to be active in the next year
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- Figure 43: Investors’ intentions, July 2017
- Half of Millennial investors intend to invest more in the next year
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- Figure 44: Investors’ intentions, by generation, July 2017
- More than a third of people making new investments will go without advice
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- Figure 45: Investors’ investment intentions, July 2017
- Millennials set to forge out on their own with new investments
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- Figure 46: Investors’ investment intentions, July 2017
Motivations for Investing
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- Broad financial gains are the strongest drivers behind investing
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- Figure 47: Motivations for investing, July 2017
- Generation X investors target retirement savings boost
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- Figure 48: Motivations for investing, by generation, July 2017
Attitudes towards Investing
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- Investors’ attitudes suggest simpler investment services could appeal
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- Figure 49: Attitudes towards Investing, July 2017
- Comfortable risk-takers are most likely to think ethical investing is important
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- Figure 50: Attitudes towards ethical investing, by comfort with taking risk with savings, July 2017
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 51: Forecast of the value of new gross sales, 2017-22
- Forecast methodology
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