SIPPs - UK - December 2017

OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Value of SIPPs grew by 42% in the last year
Figure 1: Proportional distribution of volume and value of SIPPs in force, by sector, as August 2016
New sales forecast to reach 1.4 million in 2022
Figure 2: Forecast of volume of FCA SIPP sales – fan chart, 2012-22
Four fifths of SIPPs are sold without advice
Figure 3: Proportion of total FCA SIPP sales sold through advised and non-advised channels, 2013-16
Companies and brands
Standard Life is the biggest provider of SIPPs, by AUA
Figure 4: Estimated market share of the largest five SIPP providers, by AUA, 2017
The consumer
Stocks and shares are the most common type of SIPP asset
Figure 5: Investments held within SIPP, September 2016 versus August 2017
Investors are torn between risk and reward
Figure 6: Important factors when choosing an investment or asset for SIPPs, August 2017
Consumers look for clear, as well as low, prices
Figure 7: Important factors when choosing a SIPP provider, August 2017
Half of investors have consulted an adviser in the last year …
Figure 8: Recent activity relating to SIPP investment strategy, transfers and switching, August 2017
… and 2018 should be similarly busy for advisers
Figure 9: Expected future activity relating to SIPP investment strategy, transfers and switching, August 2017
Two thirds have maintained or increased SIPP contributions
Figure 10: SIPP contribution levels over the past year, August 2017
A strong consumer commitment to ongoing SIPP investment
Figure 11: Expected SIPP contribution levels over the coming year, August 2017
Online services are the most commonly used channels to access SIPPs
Figure 12: Channels used to access SIPP in the last six months, August 2017
Investors actively prefer online to face-to-face access
Figure 13: Preferred channels to use to access SIPP, August 2017
What we think
ISSUES AND INSIGHTS
Investors remain upbeat for the future
The facts
The implications
More can be made of digital opportunities, but there is a limit
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Value of SIPPs grew by 42% in the last year
Four fifths of SIPPs are sold without advice
CapAd rules have shaken up the industry
MARKET SIZE AND FORECAST
Value of SIPPs grew by 42% in the last year
Figure 14: Volume and value of SIPPs in force, as at August 2016 vs August 2017
Number of new SIPPs grew by 15% in 2016
Figure 15: Number of FCA SIPP sales, 2012-17
New sales forecast to reach 1.4 million in 2022
Figure 16: Forecast of volume of FCA SIPP sales – fan chart, 2012-22
Figure 17: Forecast of new FCA SIPP business, at current prices, 2012-22
Forecast methodology
CHANNELS TO MARKET
Four fifths of SIPPs are sold without advice
Figure 18: Proportion of total FCA SIPP sales sold through advised and non-advised channels, 2013-16
Personal investment firms were responsible for 54% of sales in the last year
Figure 19: Proportion of FCA SIPP sales, by firm type, Year to June 2017
MARKET DRIVERS
Two fifths of SIPP investors report improved finances …
Figure 20: Current financial situation compared to a year ago, by gross annual household income, August 2017
… and confidence is high for the future
Figure 21: Financial confidence, August 2017
Auto-enrolment now fully rolled out
Still no joy for savers
REGULATORY AND LEGISLATIVE CHANGES
CapAd rules have shaken up the industry
FOS reports rise in SIPPs complaints …
FCA highlights due diligence as scams become more sophisticated
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Standard Life is the biggest provider of SIPPs, by AUA
Acquisitions and digital developments are at the heart of SIPPs innovation
MARKET SHARE
Standard Life is the biggest provider of SIPPs, by AUA
Figure 22: Estimated market share of the largest five SIPP providers, by AUA, 2017
Expected mass contraction of providers has failed to materialise
Figure 23: Number of SIPP providers and percentage of total sales by top providers in each quarter, Q1 2008-Q1 2017
COMPETITIVE STRATEGIES
Mergers and acquisitions remain at the forefront of SIPPs strategy …
… while digital innovation is opening new opportunities
BondMason launches P2P SIPP
THE CONSUMER – WHAT YOU NEED TO KNOW
Stocks and shares are the most common type of SIPP asset
Investors are torn between risk and reward
Consumers look for clear, as well as low, prices
Half of investors have consulted an adviser in the last year
Two thirds have maintained or increased SIPP contributions
Online services are the most commonly used channels to access SIPPs
SIPP ASSET MIX
Stocks and shares are the most common type of SIPP asset …
Figure 24: Investments held within SIPP, September 2016 versus August 2017
… driven by higher ownership among younger and higher-earning investors
Figure 25: Investments held within SIPP, by age and gross annual household income, August 2017
Half of investors have three or more types of asset in their SIPP
Figure 26: Investments held within SIPP, repertoire analysis, August 2017
ASSET CHOICE FACTORS
Looking for the best compromise …
Figure 27: Important factors when choosing an investment or asset for SIPPs, August 2017
… but risk aversion grows with age
Figure 28: Choice of “Low risk” as an important factor when choosing an investment or asset for SIPPs, by age, August 2017
Cost is key, despite SIPP investors’ wealth
Ethical investing is still a niche enterprise
SIPP PROVIDER CHOICE FACTORS
Price competition is important …
Figure 29: Important factors when choosing a SIPP provider, August 2017
… but heritage is also influential
Transparency is an attractive quality
Older investors more likely to be swayed by choice of investments
Figure 30: Choice of “Widest possible range of investment choices” as an important factor when choosing a SIPP provider, by age, August 2017
Interest in mobile apps has increased tenfold since 2015
INVESTMENT, TRANSFER & SWITCHING ACTIVITY
Half of investors have consulted an adviser in the last year …
Figure 31: Recent activity relating to SIPP investment strategy, transfers and switching, August 2017
… and four in 10 have switched funds
More changes expected in the coming year
Figure 32: Expected future activity relating to SIPP investment strategy, transfers and switching, August 2017
Younger investors are more likely to be planning a change in their SIPP
Figure 33: Agreement with expected future activity relating to SIPP investment strategy, transfers and switching, by age, August 2017
CHANGES IN CONTRIBUTION LEVEL
Two thirds have maintained or increased SIPP contributions
Figure 34: SIPP contribution levels over the past year, August 2017
Higher earners have acted more bullishly
Figure 35: SIPP contribution levels over the past year, by gross annual household income, August 2017
Half expect to keep their contributions level over the next 12 months
Figure 36: Expected SIPP contribution levels over the coming year, August 2017
CHANNELS USED TO ACCESS SIPPS
Online services are the most commonly used channels to access SIPPs
Figure 37: Channels used to access SIPP in the last six months, August 2017
Mobile is driven by younger investors
Figure 38: Preferred channels to use to access SIPP, August 2017
Women are more likely to favour seeing an adviser in person
Figure 39: Preferred channels to use to access SIPP, by gender, August 2017
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Total market sales forecast – Best- and worst-case scenarios
Figure 40: Forecast of FCA SIPP sales – Best- and worst-case scenarios, 2017-22
Forecast methodology