Table of Contents
Introduction and Abbreviations
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- Definitions
- Consumer research
- Abbreviations
Premier Insight
Executive Summary
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- Conditions conspire against investment providers
- Funds under management respond to the stock market recovery
- A flight to security
- A shifting balance of power
- Three in ten have exposure to the stock market
- Banks the preferred source of information for most…
- …but experienced investors turn to their IFA
- So much depends on the stock market
Market Drivers
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- Challenging times for the investment industry
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- Figure 1: The UK savings and investment environment, 2000 onwards
- Forgetting about the future?
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- Figure 2: Total PDI, consumer expenditure, savings and the savings ratio, at constant 1999 prices, 1999-2008
- Will interest rate rises see a return to saving?
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- Figure 3: Bank of England base rate, 1994-2004
- Have low rates inflated the house price bubble?
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- Figure 4: Mix-adjusted UK house prices, 1993-2003
- Can investors trust the markets?
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- Figure 5: Value of the FTSE 100 and FTSE All-Share indices, 1996-2004
- Small investors particularly badly burned
- Property takes attention away from equity investments
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- Figure 6: Buy-to-let lending, 1999-2003
- Securities account for 15% of identified wealth
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- Figure 7: Distribution of identified wealth, 2001
- ISA sales reflect the malaise across equity markets
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- Figure 8: Number of ISAs and amounts subscribed by component, 1999-2004
- Collective investments account for the bulk of equity ISA funds
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- Figure 9: Market value of funds held in ISAs by type of component, as of 5 April, 2000-03
- Taxing times for owners of ISAs…
- …while limits are cut
- Consumers still wary of the investment industry…
- …and split capital investment trusts are at least partially to blame
- Commission or upfront fees?
Market Size
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- A quarter of a trillion pounds under management
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- Figure 10: Total unit trust/OEIC funds under management, 2001-04
- ISA funds present a more positive picture…
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- Figure 11: Total ISA unit trust/OEIC funds under management, 2001-04
- …and the number of ISA unitholders is edging up
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- Figure 12: Number of ISA unit trust/OEIC unitholder accounts, 2001-04
- Leaving it to the last minute?
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- Figure 13: Retail sales of unit trust/OEICs, 2001-04
- Confidence still fragile
- Splitting the market?
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- Figure 14: Market capital of AITC members, 1993-2003
- Signs of a revival…
- …but it is likely to be fairly limited
Sector Analysis and Market Trends
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- Investor choices tell their own story…
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- Figure 15: Leading IMA retail sectors, 2001-04
- …but is confidence returning?
- Investment trust giants go for global growth
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- Figure 16: Leading AITC sectors and discounts, June 2004
- Dealing with the discount?
Distribution and Advice
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- Intermediaries dominate the retail market…
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- Figure 17: Gross retail sales of unit trusts and OEICs, by distribution channel, 2001-04
- …but ISA sales show a different pattern
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- Figure 18: Gross ISA sales of unit trusts and OEICs, by distribution channel, 2001-04
- Investment choices reflect individual requirements
- The new era of online sales yet to materialise
- Depolarisation to have a major impact upon the market
- Fund supermarkets give a taste of the depolarised world?
Key Players
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- Strong performance across the board
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- Figure 19: Leading unit trust/OEIC providers by funds under management, 2003 and 2004
- High street presence crucial in the retail market
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- Figure 20: Leading ISA unit trust/OEIC providers by funds under management, 2003 and 2004
- Brands can make the difference
- Foreign & Colonial still leads the pack
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- Figure 21: Leading investment trusts, by total assets, June 2004
Advertising and Promotion
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- Press the dominant channel
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- Figure 22: Advertising expenditure on collective investments by channel, year to June 2004
- Adspend shows little sign of recovery
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- Figure 23: Collective investment adspend, years to April 2003 and April 2004
- Prudential and Fidelity top spenders
Consumer Financial Activity
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- Consumers scale back their saving
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- Figure 24: Savings, investment, borrowing and debt repayment – consumers’ expected activity, September 2002-June 2004
- All groups will be less financially active
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- Figure 25: Expected financial activity, by socio-demographic and income groups, June 2004 and average for the last ten quarters
- Further problems for savings and investment providers
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- Figure 26: Leading financial activities planned in the next 6 months, December 2002-June 2004
- Royal Bank of Scotland customers most likely to be looking to buy investment trusts
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- Figure 27: Saving, investment and lending, market sizes by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), June 2004
- 65% of RBS customers intend to be financially active
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- Figure 28: Activity levels of main financial providers’ customer bases, June 2004
The Consumer
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- Cash, unsurprisingly, is still king
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- Figure 29: Ownership of selected investment products, by gender and socio-economic status, June 2004
- Consumer confusion over financial terminology?
- Equity investments and retirement planning
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- Figure 30: Ownership of selected investment products, by age, June 2004
- Risk-takers – or just rich?
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- Figure 31: Ownership of selected investment products, by television region, June 2004
- Affluent third agers – the obvious target market
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- Figure 32: Ownership of selected investment products, by Mintel Special Groups, June 2004
- The impact of the financial pages
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- Figure 33: Ownership of selected investment products, by media usage, June 2004
- Two tins of beans, a packet of tea-bags, and an equity ISA
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- Figure 34: Ownership of selected investment products, by supermarkets regularly used, June 2004
- A role for television advertising?
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- Figure 35: Ownership of selected investment products, by commercial television viewing, June 2004
- Banks and building societies still hold the key to the market
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- Figure 36: Sources of advice when purchasing collective investments, by gender and socio-economic group, June 2004
- Do your own research
- Older and wiser?
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- Figure 37: Sources of advice when purchasing collective investments, by age, June 2004
- Broadsheet readers – an exacting customer group
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- Figure 38: Sources of advice when purchasing collective investments, by media usage, June 2004
- Sainsbury’s – the home of the self-directed investor?
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- Figure 39: Sources of advice when purchasing collective investments, by supermarket usage, June 2004
- Too much time spent in front of the television, not enough reading the papers?
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- Figure 40: Sources of advice when purchasing collective investments, by commercial television viewing, June 2004
- IFAs the preferred option among existing investors…
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- Figure 41: Sources of advice when purchasing collective investments, by product ownership, June 2004
- …but there is still a role for marketers to play
Consumer Attitudes and Targeting Opportunities
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- Who gambles, and who hides their savings under the mattress?
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- Figure 42: Attitudes towards risk, by gender and socio-economic group, June 2004
- The affluent happier with risk
- Risk acceptance high among the 45-54-year-olds
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- Figure 43: Attitudes towards risk, by age, June 2004
- Investment ownership reflects risk profile
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- Figure 44: Attitudes towards risk, by investment holdings, June 2004
- Investors still look for security, even when buying equities
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- Figure 45: Key factors when selecting collective investments, by gender and socio-economic group, June 2004
- Is the message on charging getting through?
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- Figure 46: Key factors when selecting collective investments, by age, June 2004
- Tax a major motivator for collective investment holders
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- Figure 47: Key factors when selecting collective investments, by investment ownership, June 2004
- Investor confidence still shaky
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- Figure 48: Attitudes towards investing, by gender and socio-economic group, June 2004
- The attraction of risk pooling remains a strong draw…
- …but ISA changes have dealt the industry a blow
- One bitten, twice shy?
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- Figure 49: Attitudes towards investing, by age, June 2004
- Fee-based IFAs to find their market among affluent families…
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- Figure 50: Attitudes towards investing, by Mintel Special Groups, June 2004
- …and the chance to reach a new generation of investors presents itself
- Buy signs for the broadsheet readers
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- Figure 51: Attitudes towards investing, by media usage, June 2004
- Once bitten…?
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- Figure 52: Attitudes towards investing, by investment ownership, June 2004
- One in eleven collective investment holders would buy online
- Using the boss’ Internet connection?
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- Figure 53: CHAID analysis of preferred sources of information on collective investments, June 2004
- Time for affluent investors to go back to school
- Most are indifferent or wary – but a quarter could be interested
- Cluster 1 – the Indifferent (55% of sample)
- Cluster 2 – the Wary (20% of sample)
- Cluster 3 – the Informed (14% of sample)
- Cluster 4 – the Hesitant (11% of sample)
- Are men happier to dive into the market?
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- Figure 54: Investment cluster groups, by gender, age and affluence, June 2004
- Affluent families are hesitant, but interested
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- Figure 55: Investment cluster groups, by lifestage, Mintel Special Groups and media usage, June 2004
- Can Sainsbury’s customers ‘Taste the Difference’?
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- Figure 56: Investment cluster groups, by supermarket usage and commercial television viewing, June 2004
- Investment behaviour reflects attitudes
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- Figure 57: Investment product ownership by Investment cluster groups, June 2004
The Future
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- Can the stock market tempt investors back?
- Depolarisation and the market structure – consolidation…
- …or expansion?
- Online sales – how long will it take consumers to catch on?
- Can providers benefit from the pensions crisis?
Forecast
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- Still scope for the market to grow
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- Figure 58: Forecast of total unit trust/OEIC funds under management, 2003-09
- Figure 59: Forecast of total ISA unit trust/OEIC funds under management, 2003-09
- Real value of investment trusts holds steady
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- Figure 60: Forecast of the market capital of AITC members, 2003-09
- Online sales should take off in the future
- Factors used in the forecast
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