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Saving and Investing for Children - UK - May 2014

“Despite a continued squeeze on household finances felt by parents in particular, the majority continue to save for their children. Simultaneously, children exhibit a strong desire to save, revealing an opportunity for providers to support parents in offering the necessary guidance to the new generation of young savers.”

– Chryso Kolakkides, Senior Financial Services Analyst

Some questions answered in this report include:

  • Would junior ISAs benefit from increased promotion?
  • Are today’s children are becoming a generation of savvy savers?
  • What impact could branch closures present for the children’s savings market?

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Table of contents

  1. Introduction

      • Report scope and product definitions
        • Abbreviations
        • Executive Summary

            • The market
              • Children’s savings accounts and CTFs are the most popular products
                • Figure 1: Children's savings products, March 2014
              • Market factors
                • Family finances remain squeezed
                  • Growing childbirth rates
                    • Regulatory changes in the children savings and investment market
                      • Companies, brands and innovation
                        • Main retail banks dominate cash savings market
                          • 24% decline in adspend on children’s savings and investment products
                            • NatWest and RBS bring back children’s piggy banks and launch fun app
                              • Nationwide simplifies its children’s savings product range
                                • Family Investments making children financially fit for the future
                                  • The consumer
                                    • More than three in five parents save for their children
                                      • Figure 2: Saving on behalf of children, March 2014
                                    • Majority of parents contribute regularly to their children’s savings
                                      • Figure 3: Frequency of parents’ contributions to children's savings, March 2014
                                    • More than one in four non-parents save on behalf of children on special occasions
                                      • Figure 4: Frequency of non-parents’ contributions to children's savings, March 2014
                                    • Less than two fifths of children receive pocket money regularly
                                      • Figure 5: Pocket money for children, March 2014
                                    • Two in five CTF holders would consider switching to Junior ISAs
                                      • Figure 6: Switching to junior ISAs, March 2014
                                    • Parental attitudes towards saving for children
                                      • Figure 7: Agreement with the following statements relating to saving for children, March 2014
                                    • What we think
                                    • Issues and Insights

                                        • Lack of parental awareness begs for increased promotion of Junior ISAs
                                          • The facts
                                            • The implications
                                              • Today’s children are becoming a generation of savvy savers
                                                • The facts
                                                  • The implications
                                                    • Branch closures present a challenge for the children’s savings market
                                                      • The facts
                                                        • The implications
                                                        • Trend Application

                                                          • Birthday presents centred around children’s savings
                                                            • Grandparents’ role is strengthened in households’ financial mix
                                                              • Targeting the next generation of savers
                                                              • Market Drivers

                                                                • Key points
                                                                  • Family finances remain squeezed
                                                                    • Figure 8: Monthly change in RPI and average weekly earnings, January 2009 – February 2014
                                                                    • Figure 9: How respondents describe their financial situation, by presence of children, March 2014
                                                                  • Consumer sentiment for the coming year still low for parents
                                                                    • Figure 10: Consumer sentiment for the coming year, by presence of children, March 2014
                                                                  • Inflationary pressures are subsiding
                                                                    • Figure 11: Average annual changes in the RPI, CPI and Bank of England base rate, UK, 2005-13
                                                                  • Increase in childbirth rate
                                                                    • Figure 12: Number of live births and Total Fertility Rate (TFR), England and Wales, 2006-2012
                                                                  • Personal finance education in schools
                                                                    • Regulatory changes in the children savings and investment market
                                                                      • Budget 2014: Junior ISAs
                                                                        • Figure 13: Junior ISA subscription limits, 2001-14
                                                                      • Switching from CTF to Junior ISAs allowed from April 2015
                                                                      • Who’s Innovating?

                                                                        • Key points
                                                                          • NatWest and RBS bring back children’s piggy banks
                                                                            • Nationwide simplifies its children’s savings product range
                                                                              • Technology assists with promoting children’s savings
                                                                                • Fun apps for children
                                                                                  • Online tools for parents
                                                                                    • Family Investments making children financially fit for the future
                                                                                      • Greater focus on current accounts in recent years…
                                                                                        • … but potential for rising competition with switching CTFs to Junior ISA
                                                                                        • Market Size

                                                                                          • Key points
                                                                                            • Children’s savings accounts and CTFs are the most popular products
                                                                                              • Figure 14: Ownership of children's savings products, March 2014
                                                                                            • Junior ISAs slowly gaining momentum
                                                                                              • Figure 15: Number of Junior ISAs, amounts subscribed and average subscription, 2011/12-2012/13
                                                                                            • Nearly £5 billion held in CTF accounts
                                                                                              • Figure 16: Total number of accounts and market value, by CTF account type – all accounts opened by 5 April 2012
                                                                                          • Market Share

                                                                                            • Key points
                                                                                              • Main retail banks dominate cash savings market
                                                                                                • Figure 17: Ranking of the largest providers of savings accounts, by proportion of customers, January 2014
                                                                                              • Investment providers are also notable players in the market
                                                                                              • Companies and Products

                                                                                                • Barclays
                                                                                                  • Company description
                                                                                                    • Children’s savings product range
                                                                                                      • Distribution mix
                                                                                                        • Recent activity
                                                                                                          • Family Investments
                                                                                                            • Company description
                                                                                                              • Children’s savings product range
                                                                                                                • Distribution mix
                                                                                                                  • Recent activity
                                                                                                                    • HSBC
                                                                                                                      • Company description
                                                                                                                        • Children’s savings product range
                                                                                                                          • Distribution mix
                                                                                                                            • Recent activity
                                                                                                                              • Lloyds Banking Group
                                                                                                                                • Company description
                                                                                                                                  • Children’s savings product range
                                                                                                                                    • Distribution mix
                                                                                                                                      • Recent activity
                                                                                                                                        • Nationwide
                                                                                                                                          • Company description
                                                                                                                                            • Children’s savings product range
                                                                                                                                              • Distribution mix
                                                                                                                                                • Recent activity
                                                                                                                                                  • NS&I (National Savings and Investments)
                                                                                                                                                    • Company description
                                                                                                                                                      • Savings product range
                                                                                                                                                        • Distribution mix
                                                                                                                                                          • Recent activity
                                                                                                                                                            • RBS Group
                                                                                                                                                              • Company description
                                                                                                                                                                • Children’s savings product range
                                                                                                                                                                  • Distribution mix
                                                                                                                                                                    • Recent activity
                                                                                                                                                                      • Santander
                                                                                                                                                                        • Company description
                                                                                                                                                                          • Children’s savings product range
                                                                                                                                                                            • Distribution mix
                                                                                                                                                                              • Recent activity
                                                                                                                                                                                • The Children’s Mutual
                                                                                                                                                                                  • Company description
                                                                                                                                                                                    • Savings product range
                                                                                                                                                                                      • Distribution mix
                                                                                                                                                                                        • Recent activity
                                                                                                                                                                                        • Brand Communication and Promotion

                                                                                                                                                                                          • Key points
                                                                                                                                                                                            • 24% decline in adspend on children’s savings and investment products
                                                                                                                                                                                              • Figure 18: Total advertising expenditure on children’s savings and investment products (including junior ISAs), 2011/12-2013/14
                                                                                                                                                                                            • Top three advertisers account for 80% of market adspend
                                                                                                                                                                                              • Figure 19: Top advertisers of children’s saving and investment products (including junior ISAs), 2011/12-2013/14
                                                                                                                                                                                            • Junior ISA advertising shrinking drastically
                                                                                                                                                                                              • Figure 20: Total advertising expenditure on junior ISA products, 2011/12-2013/14
                                                                                                                                                                                            • A note about adspend
                                                                                                                                                                                            • Channels to Market

                                                                                                                                                                                              • Key points
                                                                                                                                                                                                • Majority of children’s products still offered in-branch only
                                                                                                                                                                                                  • Figure 21: Children’s savings product availability, by distribution channel for opening accounts, April 2014
                                                                                                                                                                                                • Decline in the UK branch network
                                                                                                                                                                                                  • Availability of online applications is picking up, but only slowly
                                                                                                                                                                                                  • Saving on Behalf of Children

                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                      • Survey background
                                                                                                                                                                                                        • More than three in five parents save for their children
                                                                                                                                                                                                          • Figure 22: Saving on behalf of children, March 2014
                                                                                                                                                                                                        • Grandparents make up the majority of non-parents saving for children
                                                                                                                                                                                                          • Affluence strongly determines ability to save
                                                                                                                                                                                                            • Figure 23: Saving on behalf of children, by household income, March 2014
                                                                                                                                                                                                            • Figure 24: Saving on behalf of children, by socio-economic status, March 2014
                                                                                                                                                                                                        • Children's Savings Products

                                                                                                                                                                                                          • Key points
                                                                                                                                                                                                            • Children’s savings accounts are the most widely owned product
                                                                                                                                                                                                              • Figure 25: Children's savings products, March 2014
                                                                                                                                                                                                            • Only 16% of parents hold Junior ISAs for their children
                                                                                                                                                                                                              • Few products are used for children’s savings
                                                                                                                                                                                                                • Figure 26: Number of children’s savings products held, March 2014
                                                                                                                                                                                                                • Figure 27: Children's savings products, by number of products held, March 2014
                                                                                                                                                                                                              • Bonds are more popular among grandparents who save for children
                                                                                                                                                                                                                • Figure 28: Children's savings products, by individuals saving on behalf of children, March 2014
                                                                                                                                                                                                              • Cash-based savings products lead in popularity
                                                                                                                                                                                                              • Frequency of Contributions to Children's Savings

                                                                                                                                                                                                                • Key points
                                                                                                                                                                                                                  • Majority of parents contribute regularly to their children’s savings
                                                                                                                                                                                                                    • Figure 29: Frequency of parents’ contributions to children's savings, March 2014
                                                                                                                                                                                                                    • Figure 30: Frequency of parents’ contributions to children's savings, by working status and household income, March 2014
                                                                                                                                                                                                                  • More than one in four non-parents save on behalf of children on special occasions
                                                                                                                                                                                                                    • Figure 31: Frequency of non-parents’ contributions to children's savings, March 2014
                                                                                                                                                                                                                  • Children show desire for gift money
                                                                                                                                                                                                                    • Figure 32: What children and teens want for their birthday, March 2014
                                                                                                                                                                                                                    • Figure 33: Demographics of children who selected ‘money’ as they choice of present, by gender and age, March 2014
                                                                                                                                                                                                                • Pocket Money for Children

                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                    • Less than two fifths of children receive pocket money regularly
                                                                                                                                                                                                                      • Figure 34: Pocket money for children, March 2014
                                                                                                                                                                                                                    • Older children are more likely to receive pocket money on a regular basis
                                                                                                                                                                                                                      • Figure 35: Pocket money for children, by age of children, March 2014
                                                                                                                                                                                                                      • Figure 36: Monthly pocket money, by age of children, March 2014
                                                                                                                                                                                                                  • Switching to Junior ISAs

                                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                                      • 40% of CTF holders would consider switching to Junior ISAs
                                                                                                                                                                                                                        • Figure 37: Switching to junior ISAs, March 2014
                                                                                                                                                                                                                      • Parents with older children are less likely to switch
                                                                                                                                                                                                                        • Figure 38: Switching to junior ISAs, by age of children, March 2014
                                                                                                                                                                                                                    • Parental Attitudes towards Children's Savings

                                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                                        • 29% of parents prefer to save in low-risk products despite the low returns
                                                                                                                                                                                                                          • Figure 39: Agreement with the following statements relating to saving for children, March 2014
                                                                                                                                                                                                                        • Only a minority of parents are interested in less traditional children’s savings products
                                                                                                                                                                                                                          • Junior ISA awareness is still low
                                                                                                                                                                                                                            • More than two in five parents encourage their children to save
                                                                                                                                                                                                                              • Online access important to less than a quarter of parents
                                                                                                                                                                                                                                • Figure 40: Frequency of contributions to children’s savings, by agreement with statement regarding accessing children’s savings account online, March 2014
                                                                                                                                                                                                                            • Appendix – Market Drivers

                                                                                                                                                                                                                                • Figure 41: GfK Consumer confidence barometer – UK, January 1994 – February 2014
                                                                                                                                                                                                                                • Figure 42: Total number of live births and Total Fertility Rate (TFR), England and Wales, 2006-2012
                                                                                                                                                                                                                            • Appendix – Channels to Market

                                                                                                                                                                                                                                • Figure 43: UK bank and building society branch networks, 2002-12
                                                                                                                                                                                                                            • Appendix – Saving on Behalf of Children

                                                                                                                                                                                                                                • Figure 44: Saving on behalf of children, by demographics, March 2014
                                                                                                                                                                                                                                • Figure 45: Saving on behalf of children, by demographics (continued), March 2014
                                                                                                                                                                                                                            • Appendix – Children's Savings Products

                                                                                                                                                                                                                                • Figure 46: Children's savings products, by demographics, March 2014
                                                                                                                                                                                                                                • Figure 47: Children's savings products, by demographics (continued), March 2014
                                                                                                                                                                                                                                • Figure 48: Children's savings products, by demographics (continued), March 2014
                                                                                                                                                                                                                                • Figure 49: Children's savings products, by demographics (continued), March 2014
                                                                                                                                                                                                                                • Figure 50: Number of children's savings products, by demographics, March 2014
                                                                                                                                                                                                                            • Appendix – Frequency of Contributions to Children's Savings

                                                                                                                                                                                                                                • Figure 51: Frequency of parents’ contributions to children's savings, by demographics, March 2014
                                                                                                                                                                                                                            • Appendix – Pocket Money for Children

                                                                                                                                                                                                                                • Figure 52: Pocket money for children, by demographics, March 2014
                                                                                                                                                                                                                                • Figure 53: Pocket money for children, by frequency of parents’ contributions to children’s savings, March 2014
                                                                                                                                                                                                                            • Appendix – Switching to Junior ISAs

                                                                                                                                                                                                                                • Figure 54: Switching to junior ISAs, by demographics, March 2014
                                                                                                                                                                                                                                • Figure 55: Frequency of parents’ contributions to children’s savings, by switching to Junior ISAs, March 2014
                                                                                                                                                                                                                            • Appendix – Parental Attitudes towards Children's Savings

                                                                                                                                                                                                                                • Figure 56: Parental attitudes towards children's savings, by demographics, March 2014
                                                                                                                                                                                                                                • Figure 57: Parental attitudes towards children's savings, by demographics (continued), March 2014

                                                                                                                                                                                                                            Companies Covered

                                                                                                                                                                                                                            • Abbey
                                                                                                                                                                                                                            • Alliance & Leicester
                                                                                                                                                                                                                            • Bank of England
                                                                                                                                                                                                                            • Barclays Bank plc
                                                                                                                                                                                                                            • Bradford & Bingley plc
                                                                                                                                                                                                                            • Cheshire Building Society
                                                                                                                                                                                                                            • Derbyshire Building Society
                                                                                                                                                                                                                            • Dunfermline Building Society
                                                                                                                                                                                                                            • Family Assurance Friendly Society
                                                                                                                                                                                                                            • Ferrari S.p.A.
                                                                                                                                                                                                                            • First Direct
                                                                                                                                                                                                                            • Grupo Santander Central Hispano S.A.
                                                                                                                                                                                                                            • HBOS plc (Halifax Bank of Scotland)
                                                                                                                                                                                                                            • HSBC Holdings plc
                                                                                                                                                                                                                            • HSBC Private Bank (UK) Limited
                                                                                                                                                                                                                            • Lloyds Banking Group
                                                                                                                                                                                                                            • Marks & Spencer
                                                                                                                                                                                                                            • Nationwide Building Society
                                                                                                                                                                                                                            • NatWest
                                                                                                                                                                                                                            • NS&I
                                                                                                                                                                                                                            • Portman Building Society
                                                                                                                                                                                                                            • Post Office Limited
                                                                                                                                                                                                                            • Royal Bank of Scotland Group plc
                                                                                                                                                                                                                            • Scottish Widows Bank plc
                                                                                                                                                                                                                            • Visa Europe

                                                                                                                                                                                                                            Saving and Investing for Children - UK - May 2014

                                                                                                                                                                                                                            £1,995.00 (Excl.Tax)