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Consumers, Saving and Investing - UK - January 2014

“Consumers generally prefer to take a long-term approach to their savings and investments. They want to secure a competitive rate but don’t want to have to spend time moving their money about on a regular basis or keeping track of when bonus rates are due to run out.”

– Stevan Obradovic, Financial Services Analyst

Some questions answered in this report include:

  • Is there scope to increase ownership of equities?
  • Introductory bonuses or long-term average savings rates?
  • What is the key to establishing regular saving activity?
  • Why should we help consumers look beyond basic savings products?

Following a difficult period after the financial crisis, the economic recovery finally seems to be gathering momentum. In 2013, annualised GDP growth is expected to hit pre-recession levels, while unemployment and inflation are on the way down.

Consumer confidence has improved and people are feeling slightly better about their financial situations compared to a year earlier. However, household budgets are still squeezed and consumers are limited in the amount of money they can actually save. At the moment, consumers are less focused on specific savings goals, are more concerned about building up a fund in case of emergencies, and are therefore not considering the optimal saving and investing products – instead resorting to familiar, risk-free products such as savings accounts and cash ISAs.

This report provides a consumer-focused analysis of the retail saving and investing market. The initial sections of this report focus on the general economy and contextual product analysis. Mintel’s exclusively commissioned consumer research forms the majority of the report. It provides analysis on consumers’ investable assets and portfolio composition. Additional analysis looks at consumers’ savings contribution habits, savings motivations, and influential factors when choosing savings or investment products.

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Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • Retail savings environment
            • Retail savings deposits increased by 4% in 2013
              • Figure 1: Retail savings balances outstanding, by sector, 2004-13^
            • Economic factors
              • Recovery finally gaining traction
                • Inflation still above target, putting pressure on household incomes
                  • Unemployment continues to fall
                    • BoE base rate remains at historical low
                      • FTSE 100 posts strong performance in 2013, and big things expected for the year ahead
                        • Consumer sentiment and confidence
                          • Consumer confidence reaches 2007 levels
                            • Figure 2: UK consumer confidence, January 1989-December 2013
                          • Increase in the number of people who are feeling better-off
                            • Figure 3: Financial situation compared to 12 months ago, November 2012 vs. November 2013
                          • The consumer
                            • Value of savings and investments
                              • Figure 4: Value of savings and investments, November 2013
                            • Saving and investment portfolio
                              • Figure 5: Saving and investment product ownership, November 2013
                            • Consumers’ savings contribution habits
                              • Figure 6: Saving/investing habits and contributions, November 2013
                            • Saving and investing goals
                              • Figure 7: Influential factors for saving and investing, November 2012 and 2013
                            • Importance of inflation
                              • Figure 8: Consumer behaviour towards inflation in relation to saving and investment products, November 2013
                            • Influential factors
                              • Figure 9: Important factors for choosing saving and investment products, November 2013
                            • Property as an investment
                              • Figure 10: Consumer attitudes towards investment and housing, November 2013
                            • What we think
                            • Issues and Insights

                                • Is there scope to increase ownership of equities?
                                  • The facts
                                    • The implications
                                      • Introductory bonuses or long-term average savings rates?
                                        • The facts
                                          • The implications
                                            • Clear goals and targets is the key to establishing regular saving activity
                                              • The facts
                                                • The implications
                                                  • Helping consumers look beyond basic savings products
                                                    • The facts
                                                      • The implications
                                                      • Trend Application

                                                        • Top of the savers
                                                          • Instant access investments
                                                            • Mintel futures: Generation Next
                                                            • Economic Background

                                                              • Key points
                                                                • GDP set for highest rate of annualised growth since the recession
                                                                  • Figure 11: UK quarterly GDP growth, Q1 2006-Q3 2013
                                                                  • Figure 12: Quarterly changes in the savings ratio*, 1998-Q3 2013
                                                                • Inflation is still having an impact on household finances and living standards
                                                                  • Figure 13: Monthly change in RPI and average weekly earnings, January 2007 – October 2013
                                                                • Unemployment rate on a downward trajectory
                                                                  • Figure 14: UK unemployment rate, seasonally adjusted, July 2008-September 2013
                                                                • Savings rates continue to suffer due to low BOE base rate
                                                                  • Figure 15: Average annual changes in the Bank of England base rate, CPI and RPI – UK January 2011-November 2013
                                                                • FTSE 100 performing well in 2013 as market optimism returns
                                                                  • Figure 16: FTSE 100 and FTSE All-share – daily index movements, January 2008-January 2014
                                                              • Retail Savings and Investment Environment

                                                                • Key points
                                                                  • Retail savings balances increased by 4% in 2013
                                                                    • Figure 17: Retail savings balances outstanding, by sector, 2004-13^
                                                                  • ISA subscriptions increased in 2012/13
                                                                    • Figure 18: Value of ISA sales, by type of ISA, 2007/08-2012/13
                                                                    • Figure 19: Volume and value of ISA subscriptions, by type of ISA, 2007/08-2012/13
                                                                  • Net and gross investment fund sales up by October 2013
                                                                    • Figure 20: Retail sales of unit trusts and OEICs – UK-domiciled, 2008-13
                                                                • Consumer Confidence

                                                                  • Key points
                                                                    • Consumer confidence up in 2013
                                                                      • Figure 21: UK consumer confidence, January 1989-December 2013
                                                                    • Fewer people describe their financial situation as tight or struggling
                                                                      • Figure 22: Current financial situation, November 2012 vs. November 2013
                                                                    • Increase in the percentage of people who are better-off
                                                                      • Figure 23: Financial situation compared to 12 months ago, November 2012 vs. November 2013
                                                                    • Consumers are feeling more financially confident
                                                                      • Figure 24: Financial confidence, November 2012 vs. November 2013
                                                                  • Value of Savings and Investments

                                                                    • Key points
                                                                      • One in two has less than £10,000 in savings and investments
                                                                        • Figure 25: Value of savings and investments, November 2013
                                                                      • Older people tend to have a higher level of savings and investments
                                                                        • Figure 26: Value of savings and investments, by age, November 2013
                                                                      • Higher earners most likely to value savings/investments over £50,000
                                                                        • Figure 27: Value of savings and investments, by gross annual household income, November 2013
                                                                      • Homeowners tend to have a higher level of savings and investments
                                                                        • Figure 28: Value of savings and investments, by housing situation, November 2013
                                                                    • Saving and Investment Portfolio

                                                                      • Key points
                                                                        • Risk-free and safe products lead the way…
                                                                          • Figure 29: Ownership of savings accounts/Cash ISAs versus equity-based investments, November 2013
                                                                        • …but future intentions show there is scope to increase ownership of equity-based products
                                                                          • Figure 30: Saving and investment product ownership and planned ownership, November 2013
                                                                        • Ownership of equities skewed towards men, over-55s and the affluent
                                                                          • Figure 31: Adults who do not own equity-based investments but plan on buying in the next year, by gender and age, November 2013
                                                                        • Portfolio composition depends on investable assets
                                                                          • Figure 32: Saving and investment product ownership and planned ownership, by value of savings and investments, November 2013
                                                                      • Saving and Investment Contribution Habits

                                                                        • Key points
                                                                          • A higher proportion save when they can rather than regularly
                                                                            • Figure 33: Saving/investing habits and contributions, November 2013
                                                                          • Financial situation dictates ability to save
                                                                            • Figure 34: Adults who have saved in the past but have not managed to add to their savings/investments in the last 12 months, by current financial situation, November 2013
                                                                          • Even those with portfolios over £50,000 have struggled to save in the last year
                                                                            • Figure 35: Saving/investing habits and contributions, by value of savings and investments, November 2013
                                                                        • Saving and Investing Goals

                                                                          • Key points
                                                                            • Saving for unexpected events and security top consumer priorities
                                                                              • Figure 36: Influential factors for saving and investing, November 2012 and 2013
                                                                            • Financial priorities dictate reasons for saving
                                                                              • Saving for a home encourages for more methodical saving
                                                                                • Figure 37: Saving/investing habits and contributions, by influential factors for saving and investing, November 2013
                                                                                • Figure 38: Saving/investing habits and contributions, by influential factors for saving and investing, November 2013 (continued)
                                                                              • Long-term goals encourage ownership of equity-based products
                                                                                • Figure 39: Ownership of savings accounts/cash ISAs and equity-based products, by influential factors for saving and investing, November 2013
                                                                                • Figure 40: Ownership of savings accounts/cash ISAs and equity-based products, by influential factors for saving and investing, November 2013 (continued)
                                                                            • Consideration of Inflation in Saving and Investing

                                                                              • Key points
                                                                                • A third of adults do not consider inflation when choosing products
                                                                                  • Figure 41: Consumer behaviour towards inflation in relation to saving and investment products, November 2013
                                                                                • Inflation-conscious are more likely to hold equity-based products
                                                                                  • Figure 42: Saving and investment product ownership and planned ownership, by consumer behaviour towards inflation in relation to saving and investment products, November 2013
                                                                                • Adults with a higher level of savings more aware of impact of inflation
                                                                                  • Figure 43: Consumer behaviour towards inflation in relation to saving and investment products, by value of savings and investment, November 2013
                                                                                • Regular savers more likely to look at inflation when choosing products
                                                                                  • Figure 44: Consumer behaviour towards inflation in relation to saving and investment products, by saving/investing habits and contributions, November 2013
                                                                              • Influential Factors when Choosing a Saving or Investment Product

                                                                                • Key points
                                                                                  • Instant access is the most important factor
                                                                                    • Figure 45: Important factors for choosing saving and investment products, November 2013
                                                                                  • Taking a longer-term approach to introductory rates
                                                                                    • Adults with higher worth portfolios more likely to look for tax efficiency and FSCS coverage
                                                                                      • Figure 46: Important factors for choosing saving and investment products, by value of savings and investments, November 2013
                                                                                    • Adults who invest in alternative products less concerned about access
                                                                                      • Figure 47: Important factors for choosing saving and investment products, by saving and investment product ownership and planned ownership, November 2013
                                                                                  • Property as an Investment

                                                                                    • Key points
                                                                                      • A third feel it makes sense to overpay on a mortgage than to save elsewhere
                                                                                        • Figure 48: Consumer attitudes towards investment and housing, November 2013
                                                                                      • A fifth of adults prefer bricks and mortar to equities
                                                                                        • Under 35s are more likely to view buying a home as an investment
                                                                                        • Appendix – Value of Savings and Investments

                                                                                            • Figure 49: Value of savings and investments, by demographics, November 2013
                                                                                            • Figure 50: Value of savings and investment, by demographics, November 2013 (continued)
                                                                                        • Appendix – Saving and Investment Portfolio

                                                                                            • Figure 51: Savings account/Cash ISA ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 52: Savings account ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 53: Cash ISA ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 54: Company pension ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 55: Personal pension ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 56: Equity-based investments ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 57: NS&I (National Savings and Investments) products ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 58: Stocks and shares ISA, by demographics ownership and planned ownership, November 2013
                                                                                            • Figure 59: Individual company shares ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 60: With profits, unit-linked, money market, distribution or guaranteed investment bond ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 61: Investment property ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 62: Investment trust ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 63: Unit trust/OEIC ownership and planned ownership, by demographics, November 2013
                                                                                            • Figure 64: Other savings or investments ownership and planned ownership, by demographics, November 2013
                                                                                        • Appendix – Saving and Investment Contribution Habits

                                                                                            • Figure 65: Saving/investing habits and contributions, by demographics, November 2013
                                                                                            • Figure 66: Saving/investing habits and contributions, by demographics, November 2013 (continued)
                                                                                        • Appendix – Saving and Investing Goals

                                                                                            • Figure 67: Most influential factors for saving and investing, by demographics, November 2013
                                                                                            • Figure 68: Less influential factors for saving and investing, by demographics, November 2013
                                                                                        • Appendix – Consideration of Inflation in Saving and Investing

                                                                                            • Figure 69: Consumer behaviour towards inflation in relation to saving and investment products, by demographics, November 2013
                                                                                        • Appendix – Influential Factors when Choosing a Saving or Investment Product

                                                                                            • Figure 70: Most influential factors for choosing saving and investment products, by demographics, November 2013
                                                                                            • Figure 71: Less important factors for choosing saving and investment products, by demographics, November 2013
                                                                                        • Appendix – Property as an Investment

                                                                                            • Figure 72: Consumer attitudes towards investment and housing, by demographics, November 2013

                                                                                        Companies Covered

                                                                                        To learn more about the companies covered in this report please contact us.

                                                                                        Consumers, Saving and Investing - UK - January 2014

                                                                                        £2,195.00 (Excl.Tax)