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
- Value of account subscriptions fell by 23%
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- Figure 1: Number of ISAs and amounts subscribed, 2010/11-2016/17
- Lifetime ISA has the potential to revive the cash ISA market
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- Figure 2: Forecast of total adult cash ISA subscriptions, 2011/12-2021/22
- Stocks and shares ISA market forecast to grow by 27% by 2021/22
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- Figure 3: Forecast of total adult stocks and shares ISA subscriptions, 2011/12-2021/22
- Personal Savings Allowance undermines ISA benefits
- Savings ratio falls to low of 1.7% in Q1 2017
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- Figure 4: Quarterly gross household savings and savings ratio, seasonally adjusted and at current prices, Q1 2013-Q1 2017
- Companies and brands
- Nationwide is the biggest provider of cash ISAs
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- Figure 5: Ranking of cash ISA providers, by proportion of ISA holders, April 2017
- Fidelity is the largest provider of stocks and shares ISAs
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- Figure 6: Top 10 investment ISA providers, by ISA funds under management, May 2016 and May 2017
- Lifetime ISA market dominated by stocks and shares
- New FinTech investment services bring investing to the masses
- Adspend falls by 38%
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- Figure 7: Total above-the-line, online display and direct mail advertising expenditure on ISAs, 2012/13-2016/17
- The consumer
- Cash ISAs are second after savings accounts for popularity
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- Figure 8: Savings product ownership, August 2017
- Only half of ISA holders aware of new Flexible ISA rule change
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- Figure 9: Awareness of the Flexible ISA rule change, August 2017
- Withdrawal restrictions are an important disciplinary feature for younger savers
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- Figure 10: Behaviours and attitudes towards the introduction of the new flexible rule changes, August 2017
- Alternative ISAs more likely to attract savings
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- Figure 11: Attitudes towards saving in an ISA, August 2017
- Online services must cater to different levels of investor
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- Figure 12: Important factors when choosing a stocks and shares ISA provider, August 2017
- A third are considering opening a Lifetime ISA
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- Figure 13: Agreement with the statement ‘I am considering opening a Lifetime ISA’, August 2017
- Consumers split over cash vs stocks and shares Lifetime ISA
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- Figure 14: Considerations and attitudes towards the Lifetime ISA, August 2017
- What we think
Issues and Insights
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- Flexible rules add another unneeded layer of complication
- The facts
- The implications
- Delayed uptake of Lifetime ISA due to desire to stay with main bank
- The facts
- The implications
- Stocks and shares providers need to take charge on transparency
- The facts
- The implications
The Market – What You Need to Know
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- Cash subscriptions fall whilst stocks and shares rise slightly
- Personal Savings Allowance undermines ISA benefits
- Growth in contributions will be driven by stocks and shares ISAs
- Savings ratio falls to low of 1.7% in Q1 2017
- People more likely to look beyond their main bank for stocks and shares
Market Size
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- Value of account subscriptions fell by 23%
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- Figure 15: Number of ISAs and amounts subscribed, 2010/11-2016/17
- Cash subscriptions fall whilst stocks and shares rise slightly
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- Figure 16: Number of ISAs and amounts subscribed, segmented by component type, 2010/11-2016/17
- Average subscription values for stocks and shares continue to rise
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- Figure 17: Average subscription per account, 2010/11-2016/17
- OEICs take greatest share of stocks and shares investments
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- Figure 18: Value of funds held in adult ISAs, by type of investment, 2013/14-2016/17
Market Forecast
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- Lifetime ISA has the potential to revive the cash ISA market
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- Figure 19: Forecast of total adult cash ISA subscriptions, 2011/12-2021/22
- Figure 20: Forecast of total adult cash ISA subscriptions, at current prices, 2011/12-2021/22
- Stocks and shares ISA market forecast to grow by 27% by 2021/22
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- Figure 21: Forecast of total adult stocks and shares ISA subscriptions, 2011/12-2021/22
- Figure 22: Forecast of total adult stocks and shares ISA subscriptions, at current prices, 2011/12-2021/22
- Forecast methodology
Market Drivers
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- Savings ratio falls to low of 1.7% in Q1 2017
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- Figure 23: Quarterly gross household savings and savings ratio, seasonally adjusted and at current prices, Q1 2013-Q1 2017
- ISA rates remain at historic lows
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- Figure 24: Average monthly quoted cash ISA variable rate and fixed rate, September 2011-August 2017
- Government introduces new ISA savings products
- Help to Buy ISA
- Lifetime ISA
- Innovative Finance ISA
Regulatory and Legislative Changes
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- Personal Savings Allowance undermines ISA benefits
- Regulatory focus on clarity and transparency
- FCA focuses on competition in the investment management market
- Improving the treatment of cash savings customers
- MiFID II aims to increase investor protection
- Government introduces new flexible feature
- Rising ISA limits unlikely to matter to the everyday saver
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- Figure 25: Annual ISA subscription limits, 2008/09-2017/18
Channels to Market
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- More people take out a cash ISA with their main bank…
- …but people look elsewhere for stocks and shares
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- Figure 26: Financial product ownership and cross-sales, June 2017
Companies and Brands – What You Need to Know
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- Nationwide is the biggest provider of cash ISAs
- Lifetime ISA market dominated by stocks and shares
- New FinTech investment services bring investing to the masses
- Adspend falls by 38%
Market Share
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- Nationwide is the largest provider of cash ISAs
- High street banks dominate the market
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- Figure 27: Ranking of cash ISA providers, by proportion of ISA holders, April 2017
- Fidelity is the largest provider of stocks and shares ISAs
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- Figure 28: Top 10 investment ISA providers, by ISA funds under management, May 2016 and May 2017
Competitive Strategies
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- Lifetime ISA market dominated by stocks and shares
- Uptake of the Innovative Finance ISA has been muted
- Not all providers have adapted to the new flexible rules
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- Figure 29: Selected cash ISA providers, October 2017
- Breadth of products varies by type of provider
- FinTech challengers avoid cash ISAs
- Savings providers act ahead of any future interest rate rises
Launch Activity and Innovation
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- Providers look for ways to help people maximise their allowance
- Charter Savings launches Mix and Match ISA
- CustomISA from Newcastle Building Society
- Virgin Money champions interest alternatives
- Double Champions Cash ISA
- Increased points incentive for new stocks and shares ISA holders
- Vanguard launches in the UK with half-price fees
- New FinTech investment services bring investing to the masses
- Nutmeg
- Munnypot
- Wealthify
- Moneybox
Advertising and Marketing Activity
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- Adspend falls by 38%
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- Figure 30: Total above-the-line, online display and direct mail advertising expenditure on ISAs, 2012/13-2016/17
- Cash ISA providers’ adspend remains low
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- Figure 31: Top 10 recorded above-the-line, online display and direct mail advertisers of cash ISAs, 2012/13-2016/17
- Fidelity is the largest advertiser of stocks and shares ISAs
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- Figure 32: Top 10 recorded above-the-line, online display and direct mail advertisers of stocks and shares ISAs, 2012/13-2016/17
- Press takes largest proportion of advertising spend
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- Figure 33: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by media type, 2016/17
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Cash ISAs are second after savings accounts for popularity
- Only half of ISA holders are aware of new Flexible ISA rule change
- Alternative ISAs are more likely to attract savings
- Online services must cater to different levels of investor
- A third are considering opening a Lifetime ISA
Savings Product Ownership
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- Savings accounts are the most commonly held saving/investment product
- One in five own a stocks and shares ISA
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- Figure 34: Savings product ownership, August 2017
- Help to Buy/Lifetime ISA uptake strongest among 18-34-year-olds
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- Figure 35: Savings product ownership, by age, August 2017
Value of ISA Savings
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- A fifth have less than £1,000 in ISA savings…
- …whilst only a third have over £10,000
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- Figure 36: Value of ISA savings, August 2017
- Stocks and shares ISA holders more likely to have over £10,000 in ISA savings
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- Figure 37: Value of ISA savings, by ISA ownership, August 2017
Awareness of the Flexible Rule Change
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- Only half of ISA holders are aware of the changes
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- Figure 38: Awareness of Flexible ISA rule change, August 2017
- Higher-value savers more aware
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- Figure 39: Awareness of Flexible ISA rule change, by value of ISA savings, August 2017
Attitudes towards the Flexible Rule Change
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- Three quarters say they like the flexibility...
- …but the restrictions are an important disciplinary feature for younger savers
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- Figure 40: Behaviours and attitudes towards the introduction of the new flexible rule changes, August 2017
- Providers need to do more to increase clarity around the new feature
- Flexible feature has led to a change in behaviour
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- Figure 41: Behaviours and attitudes towards the introduction of the new flexible rule changes, by age, August 2017
Attitudes towards Saving in an ISA
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- Low rates are affecting people’s incentive to save
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- Figure 42: Attitudes towards saving in an ISA, August 2017
- Half save in their ISA first…
- …rising among those with newer forms of ISAs
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- Figure 43: Agreement with the statement ‘I save in my ISA before saving anywhere else’, by type of ISA held, August 2017
- Only one in five will consider opening a stocks and shares ISA
Moving Money
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- A third have moved money out of an ISA
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- Figure 44: Money movements over the last 12 months, August 2017
- Savers with lower ISA balances more likely to have moved money
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- Figure 45: Agreement with the statement ‘I've moved money from an ISA to my current account/other cash-based savings account in the last 12 months’, by value of ISA savings, August 2017
- One in five have moved money to an investment product…
- …but ultimately cash alternatives are preferred over stocks and shares
Choosing a Stocks and Shares ISA
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- Lack of understanding means clarity is key
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- Figure 46: Important factors when choosing a stocks and shares ISA provider, August 2017
- Simplicity is more important than having a range of investment options
- Online services must cater to different levels of investor
Attitudes towards the Lifetime ISA
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- A third are considering opening a Lifetime ISA
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- Figure 47: Agreement with the statement ‘I am considering opening a Lifetime ISA’, August 2017
- 25-29-year-olds most likely to be considering opening one
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- Figure 48: Considerations and attitudes towards the Lifetime ISA, by age, August 2017
- The need for access puts people off
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- Figure 49: Considerations and attitudes towards the Lifetime ISA, August 2017
- Split over cash vs investment preference
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Best- and worst-case forecasts for cash ISA subscription value
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- Figure 50: Best- and worst-case forecasts for total adult cash ISA subscriptions, at current prices, 2016/17-2021/22
- Best- and worst-case forecasts for stocks and shares ISA subscription value
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- Figure 51: Best- and worst-case forecasts for total adult stocks and shares ISA subscriptions, at current prices, 2016/17-2021/22
- Cash ISA volume forecast
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- Figure 52: Market forecast for number of adult cash ISA subscriptions, 2011/12-2021/22
- Figure 53: Best- and worst-case forecasts for total number of adult cash ISA subscriptions, 2016/17-2021/22
- Stocks and shares ISA volume forecast
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- Figure 54: Market forecast for number of adult stocks and shares ISA subscriptions, 2011/12-2021/22
- Figure 55: Best- and worst-case forecasts for number of adult stocks and shares ISA subscriptions, 2016/17-2021/22
- Forecast methodology
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