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ISAs - UK - November 2018

OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Value of ISA subscriptions grew by 13% in 2017/18
Figure 1: Number of ISAs and amount subscribed, 2011/12-2017/18
The cash ISA market is set for a gradual recovery
Figure 2: Forecast of total cash ISA subscriptions, 2012/13-2022/23
Stocks and shares ISA subscriptions to reach £50 billion in 2022/23
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
Figure 4: Sources of information for most recent ISA product, August 2018
Companies and brands
21% of cash ISA holders have a Nationwide ISA
Figure 5: Ranking of cash ISA providers, by proportion of ISA holders, March 2018
Fidelity remains the largest stocks and shares ISA provider
Figure 6: Top 10 investment ISA providers, by ISA funds under management, May 2017 and May 2018
Total adspend increases by one fifth
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
Figure 8: Savings product ownership, August 2018
Brand recognition is influential in product choice
Figure 9: important factors when choosing an ISA provider, August 2018
48% would like to make their own investment decisions
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
Figure 11: Interest in automated advice services, August 2018
Over half of eligible consumers would consider the lifetime ISA
Figure 12: Interest in the lifetime ISA, August 2018
Half actively favour cash lifetime ISAs over stocks and shares ones
Figure 13: Attitudes towards lifetime ISAs, August 2018
62% would use a lifetime ISA for a deposit for their first home
Figure 14: Reason for saving in a Lifetime ISA, August 2018
What we think
ISSUES AND INSIGHTS
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
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
ISA subscriptions grew by 13% in 2017/18
Figure 15: Number of ISAs and amount subscribed, 2011/12-2017/18
Stocks and shares ISAs grow by 29%
Figure 16: Number of ISAs and amounts subscribed, segmented by component type, 2011/12-2017/18
Lifetime ISA subscriptions surpass the innovative finance ISA
Figure 17: Value of lifetime and innovative finance ISAs subscriptions, 2017/18
Average stocks and shares ISA subscriptions top £10,000
Figure 18: Average subscription per account, 2011/12-2017/18
OEICs the most popular stocks and shares investment
Figure 19: Value of funds held in adult ISAs, by type of investment, 2013/14-2017/18
MARKET FORECAST
Cash ISA subscriptions forecast for steady growth
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
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
ISA holders are most likely to get information from their main bank
A quarter have used a price comparison website
Figure 24: Sources of information for most recent ISA product, August 2018
Stocks and shares savers prefer to research online
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
Figure 26: Number of information sources used, by product ownership, August 2018
MARKET DRIVERS
UK households spending more than they save
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
Figure 28: Average monthly quoted cash ISA variable and fixed rate, January 2012-September 2018
MARKET ENVIRONMENT
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
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
Nationwide accounts for one fifth of cash ISAs
Figure 29: Ranking of cash ISA providers, by proportion of ISA holders, March 2018
Fidelity remains the largest stocks and shares provider
Figure 30: Top 10 investment ISA providers, by ISA funds under management, May 2017 and May 2018
LAUNCH ACTIVITY AND INNOVATION
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
Total adspend increases by 20%
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
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
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
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
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
Over 60% own an ISA product…
…but only 18% have a stocks and shares ISA
Figure 35: Savings product ownership, August 2018
City-dwellers significantly more likely to own a Help to Buy or lifetime ISA
Figure 36: Savings product ownership, by area, August 2018
IMPORTANT FACTORS WHEN CHOOSING AN ISA PROVIDER
Brand recognition is influential in product choice
23% prioritise low penalties for transferring funds
Figure 37: Important factors when choosing an ISA provider, August 2018
Investors more likely to value adviser recommendations and online features
Figure 38: Important factors when choosing an ISA provider, by product ownership, August 2018
INVESTMENT DECISION-MAKING PREFERENCES
48% would like to make their own investment decisions
Figure 39: Stocks and shares ISA investment preferences, August 2018
Wealthier savers more likely to consider a stocks and shares ISA
Figure 40: Stocks and shares ISA investment preferences, by household income, August 2018
ATTITUDES TOWARDS AUTOMATED ADVICE SERVICES
48% would be willing to use automated advice services
Figure 41: Interest in automated advice services, August 2018
Under-35s most open to automated advice
Figure 42: Interest in automated services, by age, August 2018
INTEREST IN LIFETIME ISAS
Over 50% would consider a lifetime ISA
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
Figure 44: Important factors when choosing an ISA provider, by interest in the lifetime ISA, August 2018
ATTITUDES TOWARDS LIFETIME ISAS
Half actively favour cash lifetime ISAs over stocks and shares ones
Savers could be put off by the withdrawal penalty
Figure 45: Attitudes towards lifetime ISAs, August 2018
Clarity is required to improve understanding
Figure 46: Agreement with the statement ‘Lifetime ISAs are difficult to understand’, by age, August 2018
REASON FOR SAVING IN A LIFETIME ISA
Buying a first home is the biggest reason for lifetime ISA ownership …
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
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Best-and worst-case forecasts for cash ISA subscription value
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
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
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
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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