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Saving and Investing for Children - UK - February 2013

INTRODUCTION
Abbreviations
EXECUTIVE SUMMARY
The market
Children’s savings accounts and CTFs are the most widely owned products
Figure 1: Preferred products for children’s savings, December 2012
Market factors
Low interest rates are hampering returns, especially when accounting for inflation
Parents should consider equities for long-term savings goals
Children are getting significantly less pocket money than pre-2008
Companies, brands and innovation
Lloyds Banking Group is most likely the lead provider of children’s savings accounts
Brand promotion
Who’s innovating?
The consumer
Saving on behalf of children
Figure 2: Saving on behalf of children, December 2012
Motivations for saving on behalf of children
Figure 3: Savings motivations, December 2012
Influential factors for product uptake
Figure 4: Important factors when choosing a savings product, December 2012
Parental attitudes towards children’s savings
Figure 5: Parents’ attitudes towards children’s savings, December 2012
What we think
ISSUES IN THE MARKET
Have low interest rates made parents more interested in less traditional products?
How is the Junior ISA market performing a year after launch?
What do parents look for when taking out children’s savings products?
What lies ahead for the Child Trust Fund sector?
TREND APPLICATION
A family day centred around the importance of saving
Happy Birthday, here is your present from us
Mintel futures: Old Gold
MARKET DRIVERS
Key points
Junior ISAs fail to invigorate the children’s savings market
Low interest rate environment is hurting savings returns
Figure 6: UK inter-bank, three-month rate+ and selected UK bank rates*, January 2002-November 2012
Equity-based investments can be a good long-term strategy
Figure 7: Performance of the FTSE-100 index, January 2007-December 2012
UK savings ratio below 2009 levels, but is on the up
Figure 8: UK savings ratio, 2005-12
Growing childbirth rates present opportunities for providers
Average pocket money has still not recovered to pre-recession levels
Figure 10: Trends in average weekly pocket money received by 8-15 year-olds, 2003-12
Difference in how boys and girls spend pocket money
Figure 11: How children spend their pocket money, boys vs girls, April 2012
SWOT ANALYSIS
Figure 12: Children’s saving and investing market – SWOT analysis, 2013
WHO’S INNOVATING?
Key points
Halifax ties in adult and Junior ISAs for a booster rate
Comeback of the NatWest piggy bank
Roosterbank takes the piggy bank online
Saving for children and helping charitable causes
Nationwide supports The Snowman sequel
PKTMNY launches prepaid debit card for children
MARKET SIZE
Key points
Children’s savings accounts and CTFs are the most widely owned products
Figure 13: Preferred products for children’s savings, December 2012
Junior ISAs still have potential, but require support and potential tweaks
Figure 14: Number of Junior ISAs, amounts subscribed and average subscription, 2011*/12
CTFs peak at around 6.3 million opened accounts
Figure 15: Total number of CTF vouchers and total number of accounts opened, January 2005-June 2011
MARKET SHARE
Key points
Junior ISA market open for a dominant player
Lloyds Banking Group is the number one in the adult savings market
Figure 16: Ranking of largest providers of savings accounts, by product sector, February 2012
COMPANIES AND PRODUCTS
Barclays
Family Investments
HSBC
Lloyds Banking Group
Nationwide
NS&I (National Savings and Investments)
RBS
Santander
The Children’s Mutual
BRAND COMMUNICATION AND PROMOTION
Key points
Adspend on children’s savings and investment products down by 37%
Figure 17: Topline advertising expenditure on children’s savings and investment products, 2010-12
Top three advertisers account for around two thirds of adspend
Figure 18: Advertising expenditure on savings and investment product for children, by advertiser, 2010-12
Press campaigns continue to dominate adspend
Figure 19: Advertising expenditure on children’s savings and investment products, by media type, 2010-12
Junior ISA advertising actually shrank in first full year of availability
Figure 20: Topline advertising expenditure on Junior ISAs, 2011-12
A note on adspend
CHANNELS TO MARKET
Key points
The majority of children’s products are available exclusively in-branch
Figure 21: Select product availability, by distribution, February 2013
Adult savings accounts are mostly accessed online
SAVING ON BEHALF OF CHILDREN
Key points
Over half of parents save for their children
Figure 22: Saving on behalf of children, December 2012
Parental desire to save is not always enough
Figure 23: Saving on behalf of children, by demographics, December 2012
Rental obligations can have a detrimental effect on saving ability
Figure 24: Parents saving on behalf of their children, by accommodation status, December 2012
Potential for M&S Bank to develop children’s savings products
CHILDREN’S SAVINGS PRODUCTS
Key points
Children’s savings accounts and CTFs are the most widely owned products
Figure 25: Preferred products for children’s savings, December 2012
Junior ISA uptake has been slow, but there are some encouraging signs
Very few products are used by parent savers
Older parents less likely to contribute to CTFs
Figure 26: Preferred products for children’s savings, by age, December 2012
Affluence dictates product ownership
Figure 27: Preferred products for children’s savings, by age, December 2012
MOTIVATIONS FOR SAVING ON BEHALF OF CHILDREN
Key points
University/education costs are the most important reasons for saving
Figure 28: Savings motivations, December 2012
General savings and child encouragement also popular among parents
Product suitability can depend on savings motivations
Figure 29: Savings motivations, by preferred products for children’s savings, December 2012
INFLUENTIAL FACTORS FOR PRODUCT UPTAKE
Key points
Parental control is most important for product choice
Figure 30: Important factors when choosing a savings product, December 2012
Interest rates and provider familiarity are also important to parent savers
Ethical practices, internet access and other services appeal to a minority
Higher-income families more likely to want control and better returns
Figure 31: Important factors when choosing a savings product, by household income, December 2012
Parents looking for control slightly more likely to venture outside of CTFs
Figure 32: Preferred products for children’s savings, by important factors when choosing a savings product, December 2012
PARENTAL ATTITUDES TOWARDS CHILDREN’S SAVINGS
Key points
Teaching and encouraging children to save is important to a larger number of parents
Figure 33: Parents’ attitudes towards children’s savings, December 2012
A large number of parents save irregularly, while some are simply struggling
Junior ISA awareness and interest in alternative products are low
Birthday/pocket money contributions more likely to be invested outside of CTFs
Figure 34: Preferred products for children’s savings, by parents’ attitudes towards children’s savings, December 2012
Figure 35: Parents who encourage children to save birthday/pocket money, by savings motivations, December 2012
APPENDIX – SAVING ON BEHALF OF CHILDREN
Figure 36: Saving on behalf of children, by demographics, December 2012
APPENDIX – CHILDREN’S SAVINGS PRODUCTS
Figure 37: Preferred products for children’s savings, December 2012
Figure 38: Less popular children’s savings products, December 2012
APPENDIX – MOTIVATIONS FOR SAVING ON BEHALF OF CHILDREN
Figure 39: Savings motivations, December 2012
Figure 40: Less important savings motivations, December 2012
APPENDIX – INFLUENTIAL FACTORS FOR PRODUCT UPTAKE
Figure 41: Important factors when choosing a savings product, December 2012
Figure 42: Less important factors when choosing a savings product, December 2012
APPENDIX – PARENTAL ATTITUDES TOWARDS CHILDREN’S SAVINGS
Figure 43: Parents’ attitudes towards children’s savings, December 2012
Figure 44: Parents’ attitudes towards children’s savings continued, December 2012

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