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 ISA subscriptions grew by 13% in 2017/18
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- Figure 1: Number of ISAs and amount subscribed, 2011/12-2017/18
- The cash ISA market is set for a gradual recovery
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- Figure 2: Forecast of total cash ISA subscriptions, 2012/13-2022/23
- Stocks and shares ISA subscriptions to reach £50 billion in 2022/23
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- Figure 3: Forecast of total stocks and shares ISA subscriptions, 2012/13-2022-23
- ISA holders are most likely to get information from their main bank
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- Figure 4: Sources of information for most recent ISA product, August 2018
- Companies and brands
- 21% of cash ISA holders have a Nationwide ISA
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- Figure 5: Ranking of cash ISA providers, by proportion of ISA holders, March 2018
- Fidelity remains the largest stocks and shares ISA provider
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- Figure 6: Top 10 investment ISA providers, by ISA funds under management, May 2017 and May 2018
- Total adspend increases by one fifth
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- Figure 7: Total above-the-line, online display and direct mail advertising on ISAs. 2013/14-2017/18
- The consumer
- 64% own an ISA product
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- Figure 8: Savings product ownership, August 2018
- Brand recognition is influential in product choice
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- Figure 9: important factors when choosing an ISA provider, August 2018
- 48% would like to make their own investment decisions
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- Figure 10: Stocks and shares ISA investment preferences, August 2018
- 48% of those considering a stocks and share ISA are willing to use automated advice
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- Figure 11: Interest in automated advice services, August 2018
- Over half of eligible consumers would consider the lifetime ISA
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- Figure 12: Interest in the lifetime ISA, August 2018
- Half actively favour cash lifetime ISAs over stocks and shares ones
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- Figure 13: Attitudes towards lifetime ISAs, August 2018
- 62% would use a lifetime ISA for a deposit for their first home
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- Figure 14: Reason for saving in a Lifetime ISA, August 2018
- What we think
Issues and Insights
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- Developments are required for the lifetime ISA to be a success
- The facts
- The implications
- New technology will drive growth in stocks and shares ISAs
- The facts
- The implications
The Market – What You Need to Know
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- Value of ISA subscriptions grew by 13% in 2017/18
- Cash ISAs set for modest growth compared to stocks and shares
- ISA holders are most likely to get information from their main bank
- UK households spending more than they save
- Government commits to the lifetime ISA
Market Size
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- ISA subscriptions grew by 13% in 2017/18
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- Figure 15: Number of ISAs and amount subscribed, 2011/12-2017/18
- Stocks and shares ISAs grow by 29%
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- Figure 16: Number of ISAs and amounts subscribed, segmented by component type, 2011/12-2017/18
- Lifetime ISA subscriptions surpass the innovative finance ISA
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- Figure 17: Value of lifetime and innovative finance ISAs subscriptions, 2017/18
- Average stocks and shares ISA subscriptions top £10,000
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- Figure 18: Average subscription per account, 2011/12-2017/18
- OEICs the most popular stocks and shares investment
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- Figure 19: Value of funds held in adult ISAs, by type of investment, 2013/14-2017/18
Market Forecast
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- Cash ISA subscriptions forecast for steady growth
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- Figure 20: Forecast of total cash ISA subscriptions, 2012/13-2022/23
- Figure 21: Forecast of total cash ISA subscriptions, 2012/13-2022/23
- Stocks and shares ISA subscriptions to reach £50 billion in 2022/23
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- Figure 22: Forecast of total stocks and shares ISA subscriptions, 2012/13-2022-23
- Figure 23: Forecast of total stocks and shares ISA subscriptions, 2012/13-2022-23
- Forecast methodology
Channels to Market
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- ISA holders are most likely to get information from their main bank
- A quarter have used a price comparison website
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- Figure 24: Sources of information for most recent ISA product, August 2018
- Stocks and shares savers prefer to research online
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- Figure 25: Sources of information for most recent ISA product, by product ownership, August 2018
- Help to Buy, lifetime and innovative finance ISA owners use the most sources
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- Figure 26: Number of information sources used, by product ownership, August 2018
Market Drivers
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- UK households spending more than they save
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- Figure 27: UK households’ cash basis saving ratio and national accounts saving ratio, seasonally adjusted and at current prices, Q1 2014-Q2 2018
- ISA rates on the rise, but remain low
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- Figure 28: Average monthly quoted cash ISA variable and fixed rate, January 2012-September 2018
Market Environment
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- Largest cash ISA providers fail to reflect recent rate rises
- Rates to remain low despite recent increase
- Government rejects call to scrap the lifetime ISA
- Innovative finance ISAs struggling to meet demand
- Government considers ‘Care ISA’
- Contrasting success for robo-advisers
Companies and Brands – What You Need to Know
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- 21% of cash ISA holders have a Nationwide ISA
- Fidelity accounts for over 10% of the stocks and shares ISA market
- Building societies support the cash lifetime ISA market
- Providers seek to widen appeal of innovative ISAs
- Total adspend increases by one fifth
Market Share
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- Nationwide accounts for one fifth of cash ISAs
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- Figure 29: Ranking of cash ISA providers, by proportion of ISA holders, March 2018
- Fidelity remains the largest stocks and shares provider
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- Figure 30: Top 10 investment ISA providers, by ISA funds under management, May 2017 and May 2018
Launch Activity and Innovation
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- New products and initiatives could reinvigorate the lifetime ISA
- Newcastle Building Society opens the third cash lifetime ISA
- Skipton expands exclusive mortgage products available to lifetime ISA customers
- Unity Mutual launches new stocks and shares lifetime ISA
- Providers battle to offer easy access ISAs at the best rate
- Paragon launches limited edition easy-access account
- Leeds Building Society introduces online only instant access ISA
- Goldman Sachs cash ISA on the horizon
- Providers look to increase the appeal of the innovative Finance ISA
- EasyJet founder forms EasyMoney
- The House Crowd lowers minimum investment for ISA transfers
- Zopa improves the ease of ISA contributions
- ApplesforOranges.co.uk launches innovative finance ISA price comparison website
- Hargreaves Lansdown Active Savings increases access to ISAs
- Neyber launches employee workplace ISA platform
Advertising and Marketing Activity
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- Total adspend increases by 20%
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- Figure 31: Total above-the-line, online display and direct mail advertising on ISAs. 2013/14-2017/18
- Skipton and Nationwide account for over 50% of adspend on cash ISAs
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- Figure 32: Top 10 recorded above-the-line, online display and direct mail advertisers of cash ISAs, 2013/14-2017/18
- Fidelity leads stocks and shares ISA adspend
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- Figure 33: Top 10 recorded above-the-line, online display and direct mail advertisers of stocks and shares ISAs, 2013/14-2017/18
- Press remains the dominant advertising method
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- Figure 34: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by media type, 2017/18
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- 64% own an ISA product
- Brand recognition is influential in product choice
- 48% would like to make their own investment decisions
- 48% of those considering a stocks and share ISA are willing to use automated advice
- Over half of eligible consumers would consider the lifetime ISA
- Half actively favour cash lifetime ISAs over stocks and shares
- 62% would use a lifetime ISA for a deposit for their first home
Savings Product Ownership
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- Over 60% own an ISA product…
- …but only 18% have a stocks and shares ISA
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- Figure 35: Savings product ownership, August 2018
- City-dwellers significantly more likely to own a Help to Buy or lifetime ISA
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- Figure 36: Savings product ownership, by area, August 2018
Important Factors when choosing an ISA Provider
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- Brand recognition is influential in product choice
- 23% prioritise low penalties for transferring funds
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- Figure 37: Important factors when choosing an ISA provider, August 2018
- Investors more likely to value adviser recommendations and online features
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- Figure 38: Important factors when choosing an ISA provider, by product ownership, August 2018
Investment Decision-making Preferences
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- 48% would like to make their own investment decisions
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- Figure 39: Stocks and shares ISA investment preferences, August 2018
- Wealthier savers more likely to consider a stocks and shares ISA
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- Figure 40: Stocks and shares ISA investment preferences, by household income, August 2018
Attitudes towards Automated Advice Services
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- 48% would be willing to use automated advice services
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- Figure 41: Interest in automated advice services, August 2018
- Under-35s most open to automated advice
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- Figure 42: Interest in automated services, by age, August 2018
Interest in Lifetime ISAs
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- Over 50% would consider a lifetime ISA
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- Figure 43: Interest in the lifetime ISA, August 2018
- Potential lifetime ISA customers more open to adviser interactions…
- …and keen to use well-known providers
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- Figure 44: Important factors when choosing an ISA provider, by interest in the lifetime ISA, August 2018
Attitudes towards Lifetime ISAs
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- Half actively favour cash lifetime ISAs over stocks and shares ones
- Savers could be put off by the withdrawal penalty
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- Figure 45: Attitudes towards lifetime ISAs, August 2018
- Clarity is required to improve understanding
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- Figure 46: Agreement with the statement ‘Lifetime ISAs are difficult to understand’, by age, August 2018
Reason for Saving in a Lifetime ISA
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- Buying a first home is the biggest reason for lifetime ISA ownership …
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- Figure 47: Reason for saving in a lifetime ISA, August 2018
- …which contributes to a preference for cash ISAs
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 48: Best-and worst-case forecasts for total adult cash ISA subscriptions, at current prices, 2017/18-2022/23
- Best-and worst-case forecasts for stocks and shares ISA subscription value
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- Figure 49: Best-and worst-case forecasts for total stocks and shares ISA subscriptions, at current prices, 2017/18-2022/23
- Cash ISA volume forecast
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- Figure 50: Market forecast for number of adult cash ISA subscriptions, 2012/13-2022/23
- Figure 51: Best-and worst-case forecasts for total number of adult cash ISA subscriptions, 2017/18-2022/23
- Stocks and shares ISA volume forecast
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- Figure 52: Market forecast for number of stocks and shares ISA subscriptions, 2012/13-2022/23
- Figure 53: Best-and worst-case forecasts for number of stocks and shares ISA subscriptions, 2017/18-2022/23
- Forecast methodology
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