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
- 2017 proves to be a record year for net fund sales
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- Figure 1: Forecast of the value of gross retail sales, 2013-23
- Intermediaries increase their share of distribution
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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, 2013-17 H1
- Low investable assets suppressing flow of new investors
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- Figure 3: Household savings ratio, 2008-17
- Regulatory changes cause uncertainty
- Companies and brands
- M&G remains top of unchanged company rankings
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- Figure 4: Top 10 asset managers, by total retail funds under management, March 2017 and March 2018
- Platform competition hots up while costs and charges get strategic
- The consumer
- Almost half of people with savings or investments are uncomfortable with risk
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- Figure 5: Level of comfort taking risks with savings, aggregated, June 2018
- Stock-picking remains among most popular approaches
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- Figure 6: Investment product ownership, June 2018
- Only 12% of non-investors intend to invest in the next year
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- Figure 7: Intentions to invest, June 2018
- Online investing has become the firm favourite among investors
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- Figure 8: Channels used to invest, June 2018
- Investors show impressive confidence in decision-making
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- Figure 9: Attitudes towards investing, June 2018
- More than a third say they would be likely to consider micro-investing, rising to over half of Millennials
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- Figure 10: Consideration of micro-investing, June 2018
- What we think
Issues and Insights
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- Micro-investing could hold the key to building a pipeline of new investors for the future
- The facts
- The implications
- Ethical investing could become the new normal
- The facts
- The implications
The Market – What You Need to Know
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- 2017 proves to be a record year for net fund sales
- Net retail sales bounce back dramatically in 2017
- Intermediaries increase their share of distribution
- Low savings ratio and low investable assets
- Regulatory changes cause uncertainty
Market Size and Forecast
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- 2017 proves to be a record year for net fund sales
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- Figure 11: Value of gross and net retail sales, 2013-18
- Growth in guaranteed and with-profit bonds slows
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- Figure 12: Unit-linked, guaranteed and with-profit bonds, 2014-17
- Two in five UK adults own an investment product
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- Figure 13: Investment product ownership, June 2018
- Gross fund sales expected to grow in post-Brexit environment
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- Figure 14: Forecast of the value of gross retail sales, 2013-23
- Figure 15: Forecast of the value of gross retail sales, at current prices, 2013-23
- Forecast methodology
Market Segmentation
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- Net retail sales bounce back dramatically in 2017
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- Figure 16: Net retail sales of funds, by asset class, 2013-17
- FCA new sales data reveals strong growth in with-profit bonds
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- Figure 17: New retail investment sales, by investment product type, 2012-17 H1
- Value of stocks and shares ISAs recovered in 2016/17, while cash fell by a third
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- Figure 18: Number of ISAs and amounts subscribed to each component, 2008/09-2016/17*
- Figure 19: Average subscription per account, 2012/13-2016/17*
Channels to Market
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- Intermediaries increase their share of distribution
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- Figure 20: Gross retail sales, by distribution channel, 2017
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- Figure 21: Gross retail sales, by distribution channel, 2013-17
- FCA data shows new non-advised sales made progress in early 2017
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- Figure 22: Advised and non-advised new sales based upon sales data of bonds, stocks and shares ISAs, trusts and OEICs, 2013-17 H1
- Seven in 10 usually use online channels to invest
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- Figure 23: Channels used to invest, June 2018
Market Drivers
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- Interest rates begin to rise
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- Figure 24: Effective interest rates on household deposit balances versus official bank base rate, January 2010-June 2018
- A historic low savings ratio…
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- Figure 25: Household savings ratio, 2008-17
- …means low levels of investable assets
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- Figure 26: Value of people’s savings and investments, June 2018
- 79% of people have savings in cash
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- Figure 27: Ownership of cash saving products, February 2018
Regulatory and Legislative Changes
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- Firms continue to count the cost of implementing new legislation
- EU MiFID II
- EU PRIIPs
- FCA SM&CR
- FCA reveals expectations for discretionary management platforms
- FCA publishes interim report on investment platforms
Companies and Brands – What You Need to Know
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- M&G remains top of unchanged company rankings
- Platforms lock horns while costs and charges form a key battleground
- Providers look to traditional media for awareness
Market Share
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- No change in ranking among top 10 asset managers
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- Figure 28: Top 10 asset managers, by total retail funds under management, March 2017 and March 2018
Competitive Strategies
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- Competition hots up among online investment platforms
- Nutmeg
- Moneyfarm
- Wealthsimple
- Scalable Capital
- Wealthify
- Costs and charges becoming a key strategic point of difference
Advertising and Marketing Activity
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- Providers look to traditional media for awareness
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- Figure 29: Total above-the-line, online display and direct mail advertising expenditure on investment products, by media type, 2015/16-2017/18*
- Santander and Fidelity continue to dominate adspend
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- Figure 30: Total above-the-line, online display and direct mail advertising expenditure on investment products, by advertiser, 2015/16-2017/18*
- Search Engine Optimisation terms have been saturated by competition
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Almost half of people with savings or investments are uncomfortable with risk
- Stock-picking remains among most popular approaches
- Only 12% of non-investors intend to invest in the next year
- Online investing has become the firm favourite among investors
- Investors show impressive confidence in decision-making
- More than a third say they would be likely to consider micro-investing
Risk Sensitivity and Investable Assets
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- Almost half of people with savings or investments are uncomfortable with risk
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- Figure 31: Level of comfort taking risks with savings, aggregated, June 2018
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- Figure 32: Level of comfort taking risks with savings, June 2018
- Low investable assets means weak incentive to accept investment risk
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- Figure 33: Level of investable assets, June 2018
- People more likely to amass investable assets as they age
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- Figure 34: Level of investable assets, by generation, June 2018
Investment Product Ownership
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- Stock-picking remains among most popular approaches
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- Figure 35: Investment product ownership, June 2018
- Most investors have only one investment product
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- Figure 36: Number of investment products owned, June 2018
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- Figure 37: Investment products owned, by number of investment products owned, June 2018
- Women significantly less likely to have an investment product
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- Figure 38: Investment product ownership, by gender, June 2018
Intentions to Invest
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- Most non-investors don’t intend to start in the next year
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- Figure 39: Intentions to invest, June 2018
- Under-25s have good intentions but may encounter barriers
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- Figure 40: Intentions to invest, by age, June 2018
Channels to Investing
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- Online investing has become the firm favourite among investors
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- Figure 41: Channels used to invest, June 2018
- Younger generations set to turn investing online into the new normal
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- Figure 42: Channels used to invest, by generation, June 2018
Attitudes towards Investing
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- Investors show impressive confidence in decision-making
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- Figure 43: Attitudes towards investing, June 2018
- Younger investors have greater interest in ethical investing
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- Figure 44: Agreement with selected attitudes towards investing, by age, June 2018
- 84% of 25-34-year-olds feel confident making investment decisions
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- Figure 45: Agreement with selected attitudes towards investing, by age, June 2018
Attitudes towards Micro-investing
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- More than a third say they would be likely to consider micro-investing…
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- Figure 46: Consideration of micro-investing, June 2018
- …rising to more than half of Millennials
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- Figure 47: Consideration of micro-investing, by generation, June 2018
- Micro-investing can bring new investors to the market
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- Figure 48: Consideration of micro-investing, by likelihood to invest in the next 12 months, June 2018
- Low charges must match low contributions when micro-investing
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- Figure 49: Important factors when choosing a micro-investing service, June 2018
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 50: Forecast of the value of new gross sales, 2018-23
- Forecast methodology
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