Consumers, Saving and Investing - UK - January 2017

OVERVIEW
What you need to know
Scope of this Report
EXECUTIVE SUMMARY
The market
Retail deposits show steady growth
Figure 1: Total retail savings deposits, 2006-16*
Base rate cut to record low
Figure 2: UK’s consumer price index and base rate, January 2006 – November 2016
EU referendum vote caused mass investment exodus
Lifetime ISAs: the pension alternative?
The consumer
Consumers seek familiarity in turbulent times
Figure 3: Consumer ownership of savings products, October 2015 and October 2016
Almost 1 in 3 people look for better returns
Figure 4: Consumer ownership of investment products, October 2015 and October 2016
Majority of consumers have a buffer
Figure 5: Value of savings and investments, October 2015 and October 2016
Size and timing of contributions tends to be spontaneous
Figure 6: Methods of contributing towards savings or investments, October 2016
Low interest rates polarise consumers
Figure 7: Attitudes towards saving and investing, October 2016
Online management tools now crucial to savers and investors
Figure 8: Important factors when choosing a savings or investment provider, October 2016
What we think
ISSUES AND INSIGHTS
Brexit uncertainty adds an extra sense of caution
The facts
The implications
Balancing physical and digital demands
The facts
The implications
Investing: a rich man’s game?
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Retail deposits show steady growth
EU referendum vote caused mass investment exodus
Base rate cut to record low
Saving ratio still lags behind pre-recession levels
Lifetime ISAs: the pension alternative?
Government announces Help to Save scheme
FAMR seeks to bridge the advice gap
SAVING AND INVESTMENT MARKET SIZE 
Retail deposits show steady growth
Figure 9: Total retail savings deposits, 2006-16*
Premium Bonds limit upped to £50k
Figure 10: Retail savings deposits, 2006-16*
Stocks and shares ISAs hit record high
Figure 11: Volume and value of ISA subscriptions, by type of ISA, 2010/11-2015/16
EU referendum vote caused mass investment exodus
Figure 12: Retail sales of unit trusts and OEICs – UK-domiciled, 2012-16
Buy-to-let market hit by tax increases
Figure 13: Number of loans for buy-to-let house purchases in the UK, January 2013 – September 2016
THE SAVING AND INVESTING ENVIRONMENT
Base rate cut to record low
Figure 14: UK’s consumer price index and base rate, January 2006 – November 2016
Saving ratio still lags behind pre-recession levels
Figure 15: Quarterly variations in savings ratio, Q1 2006 – Q2 2016
Consumers’ cautious mindset
Figure 16: Trends in saving activity, June 2012 – October 2016
Investing remains a niche activity
Figure 17: Sources of investment advice, by ownership of investment products, April 2015
THE REGULATORY ENVIRONMENT
Lifetime ISAs: the pension alternative?
Figure 18: Awareness and interest in Lifetime ISAs, September 2016
Government announces Help to Save scheme
FSCS limit restored to £85,000
FAMR seeks to bridge the advice gap
Figure 19: Attitudes towards robo-advice services, February 2016
THE CONSUMER – WHAT YOU NEED TO KNOW
Nearly two fifths of consumers now have a workplace pension
Almost 1 in 3 people look for better returns
Almost half of savers do so out of caution
Low interest rates polarise consumers
Brexit uncertainty simply adds to existing investment barriers
Online management tools now crucial to savers and investors
More than half of adults interested in digital innovations
CONSUMER OWNERSHIP OF SAVINGS PRODUCTS
Consumers seek familiarity in turbulent times
Auto-enrolment widens the workplace pension net
Figure 20: Consumer ownership of savings products, October 2015 and October 2016
Millennials: a tale of two halves
Figure 21: Consumer ownership of savings products, by generation, October 2016
More than half of consumers have multiple savings products
Figure 22: Repertoire of consumer ownership of savings products, October 2015 and October 2016
CONSUMER OWNERSHIP OF INVESTMENT PRODUCTS
Almost 1 in 3 people look for better returns
Figure 23: Consumer ownership of investment products, October 2015 and October 2016
Lowering the complexity barriers for the risk-averse
Figure 24: Consumer ownership of any investment product(s), by gender and generation, October 2016
VALUE OF SAVINGS AND INVESTMENTS
Majority of consumers have a buffer
Figure 25: Value of savings and investments, October 2015 and October 2016
Nearly a fifth of 45-64s have no cash assets
Figure 26: Value of savings and investments, by age, October 2016
Saving to get on the property ladder
Figure 27: Value of savings and investments, by housing situation, October 2016
Tailoring products for low value savers
METHODS OF CONTRIBUTING TO SAVINGS
Size and timing of contributions tends to be spontaneous
Figure 28: Methods of contributing towards savings or investments, October 2016
Young and wealthy most likely to plan ahead
Figure 29: Methods of contributing towards savings or investments, by age and gross annual household income, October 2016
Figure 30: Squirrel budgeting app UI
REASONS FOR SAVING
Almost half of savers do so out of caution
Figure 31: Reasons for saving, October 2016
‘Buy now pay later’
Mission-based budgeting tools will appeal to most savers
Figure 32: Repertoire of reasons for saving, October 2016
REASONS FOR INVESTING
Two fifths of investors planning for retirement
Figure 33: Reasons for investing, October 2016
Thrill of risk-taking appeals most to young men
Figure 34: Reasons for investing, by gender and age, October 2016
Figure 35: Moneybox app UI, 2016
ATTITUDES TOWARDS SAVING AND INVESTING
Low interest rates polarise consumers
Peer-to-peer lending appeals to the more affluent
Figure 36: Attitudes towards saving and investing, October 2016
Brexit uncertainty simply adds to existing investment barriers
CHAID analysis
City-based parents the most likely to consider alternative investments
Figure 37: Consumers sentiment towards savings and investing– CHAID – Tree output, October 2016
IMPORTANT FACTORS WHEN CHOOSING PROVIDER
Online management tools now crucial to savers and investors
Established brands continue to hold sway with savers
Figure 38: Important factors when choosing a savings or investment provider, October 2016
Young men still like assurance of human advice
Figure 39: Important factors when choosing a savings or investment provider, by gender and age, October 2016
INTEREST IN DIGITAL INNOVATIONS
More than half of adults interested in digital innovations
Figure 40: Interest in digital saving and investing innovations, October 2016
Digital trackers can provide an extra touch point
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
CHAID analysis methodology
Figure 41: Consumers sentiment towards saving and investing – CHAID – Table output, October 2016